Synchrony faces lawsuit against Walmart – Connecticut Post

Walmart sues Synchrony for at least $ 800 million following the retail giant's decision earlier this year to drop Stamford's consumer financial services company as a credit card provider .

Walmart alleges that Synchrony violated its credit card agreement issued to Walmart customers, breaching an "implied term" that would not impede Walmart's ability to "receive the fruits of the contract," the retailer wrote in a heavily redacted complaint filed Thursday in Arkansas federal court. Walmart, headquartered in Bentonville, Arkansas, has requested a jury trial.

In a statement, Synchrony called the complaint "unfounded" and stated that Walmart "was trying to avoid paying the fair market value as our contract requires". She indicated that she was considering filing a substantial complaint against Walmart.

The details of the charges against the complaint are redacted. Bloomberg had previously reported the lawsuit.

Walmart, the largest US retailer of brick and mortar, announced in late July that Capital One would be the next year the exclusive issuer of its program of private brands and co-branded credit cards.

The agreement marks the end of Synchrony's two decades as a business card supplier for a $ 10 billion Walmart portfolio.

Synchrony officials announced that a new contract with PayPal, a powerful online payment engine, would help to reduce this impact.

"Although we competed for program renewal, we could not achieve economically viable conditions for our company and our shareholders," said Margaret Keane, CEO and President of Synchrony, during a call. concerning the results. "Instead, we will focus on opportunities in other areas of business, where we see significant potential with more attractive, risk-adjusted returns."

With the alliance with Walmart scheduled to finish in eight months, Synchrony is considering two options. It could sell Walmart's portfolio to Capital One, which could generate about $ 2.5 billion for a possible share buyback program. By early 2019, the company could also begin converting Walmart's eligible accounts into general purpose credit cards.

Unmodified accounts would remain Walmart cards that can be used with the retailer for the next three years. Today, double cards represent about 50% of Walmart resources managed by Synchrony.

"We are quite satisfied with our ability to execute one or the other option," said CFO Brian Doubles at the call. "In both cases, we think we can replace the impact (earnings per share). The one or the other option seems attractive to us. "

To compensate for the loss of Walmart's business, Synchrony finalized in early July the acquisition of PayPal's $ 7.6 billion consumer credit portfolio.

Through this agreement, Synchrony and PayPal have extended their 14-year co-branded credit card program. Synchrony will serve as the exclusive US issuer for PayPal Credit's online consumer finance program until 2028, contributing to its goal of becoming a major player in digital payments.

Among the major transactions completed in the last quarter, Synchrony renewed its partnerships with Lowe's and JCPenney and signed contracts with new partners, including Fred Meyer Jewelers and hearing aid manufacturer Eargo.

The company plans to further diversify its operations and explore other acquisitions.

In the third quarter, Synchrony's revenue reached $ 4.2 billion, up 9% from the previous year, driven by growth in the PayPal transaction and trade receivables. Profits increased 21% to $ 671 million.

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