Synchrony to end card partnership with Gap
STAMFORD — Synchrony, the country’s largest private-label credit card provider, will end next year its two-decade partnership with Gap Inc., after the companies were unable to agree on a program renewal.
Stamford-based Synchrony has been issuing cards for Gap for about 22 years, with the latter comprising one of Synchrony’s five-largest retail card partners. Their program includes about
11 million open card accounts, with balances totaling approximately
$3.8 billion at the end of
March. The portfolio represents about 5 percent of Synchrony’s loan receivables.
“Synchrony was unable to reach contractual and economic terms with Gap that made sense for our company and our shareholders,” Synchrony said in a filing this week to the Securities and Exchange Commission.
The Synchrony-provided private-label cards can be used for transactions with the Gap brand, as well as the Gap-owned brands of Banana Republic, Old Navy and Athleta. The co-branded cards can be used anywhere Visa cards are accepted.
All Gap and affiliated brand credit cards issued by Synchrony can continue to be used through April 30, 2022, Synchrony said in the filing.
London-headquartered banking giant Barclays will take over Gap’s card program, a decision that company officials said reflected a number of factors that were part of a “rigorous competitive process.”
The changes come amid a broader overhaul for San Francisco-headquartered Gap, which is closing hundreds of Gap and Banana Republic stores. But the company predicted last month that its sales would increase in 2021.
“Barclays offered robust and modern capabilities to support personalization, testing and measurement to drive transformational growth as we continue to evolve our rewards program to create value for our customers,” a Gap spokesperson said in an email. “We are confident that this decision will drive significant benefit to Gap Inc. in the next 10 years and help deliver on our Power Plan 2023 by attracting new customers and
“Synchrony was unable to reach contractual and economic terms with Gap that made sense for our company and our shareholders.” Synchrony, in an SEC filing this week
creating enduring relationships and lifelong loyalists as a key part of our rewards program.”
For Synchrony, its parting ways with Gap marks the second loss of a major retail partner in the past few years.
In 2018, Walmart decided to end Synchrony’s two-decade run as its credit-card provider in favor of a new deal with Capital One. The decision sparked a brief legal battle, but the companies ended up resolving their dispute and maintaining ties by extending a separate, 25-year partnership that provides cards to members of the Walmart-owned Sam’s Club.
Synchrony officials remain optimistic, however, about the company’s long-term
prospects.
In the SEC filing, the company said it expected to record in the second quarter of 2022 a gain from the sale of the Gap card portfolio and intends to spend about $1 billion to repurchase shares and invest in “higher-growth programs.” Those initiatives include partnerships with Venmo, Verizon and Walgreens, as well as its CareCredit health care financing credit card.
Synchrony, the No. 170 firm on last year’s Fortune 500 list, recorded 2020 revenues of about $14 billion, down 14 percent from 2019.
The company employs about 16,500. It is headquartered at 777 Long Ridge Road, near the Merritt Parkway’s Exit 34, in Stamford.