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Circuit City Cashes in its Cards

Retailer to sell its credit card business for about $1.8 billion

Published

22 years ago

January 21, 2004

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Circuit City Stores Inc. (Richmond, Va.) has announced plans to exit the credit-card business and to sell its private-label credit-card portfolio for $1.8 billion to Bank One Corp.

Circuit City sold the other part of its finance subsidiary, its bank-card operations, to FleetBoston Financial in November 2003.

The chain expects to incur an after-tax loss in the current quarter of about $10 million, or 5 cents per share, primarily for severance costs and related expenses. But the retailer hopes that shedding its credit-card business will give it a sharper focus on its core consumer electronics retailing business, which is struggling, while improving cash liquidity. Company officials suggested the after-tax cash proceeds from the sale of about $355 million (based on the card balances as of Nov. 30, 2003) will help pay for store renovations and other corporate purposes.

“This greatly simplifies the investment picture for Circuit City,” said chairman, president and ceo W. Alan McCollough.

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