Nordstrom Inc. is selling off its credit card operations to the Toronto-Dominion Bank Group, known as TD, the companies announced today.
TD will acquire Nordstrom’s U.S. Visa and private label consumer credit card portfolio, which totals $2.2 billion in receivables.
The deal enables the Seattle-based Nordstrom to receive “a substantial” portion of the revenue generated from the credit card accounts while also maintaining its high level of service for its credit card customers, retaining all aspects of customer-facing activities. TD will become the exclusive U.S. issuer of Nordstrom-branded Visa and private label consumer credit cards to Nordstrom customers and fund the receivables.
The deal follows the long trend among major U.S. retailers to sell off their credit operations, including J.C. Penney, Saks Fifth Avenue and Sears Holdings, to limit their exposure to credit risk and focus more on the merchandising. The value of the Nordstrom-TD deal was not disclosed.
“When we began this process a year ago, our number-one goal was to continue to take care of our customers directly,” said Blake Nordstrom, copresident, Nordstrom Inc. “We found TD to be a strong cultural fit, sharing our customer-focused approach and providing capabilities to help us further enhance the customer experience.”
“This agreement with Nordstrom, achieved through great partnership and collaboration, continues the success of our growing North American credit card business,” said Bharat Masrani, group president and chief executive officer, TD Bank Group.
Nordstrom, which operates 118 Nordstrom stores, 178 Nordstrom Rack off-price stores, two Jeffrey stores, one clearance unit, Nordstrom.com, Nordstromrack.com and HauteLook, said the transaction is expected to close in the second half of this year. The company added that the deal will have a minimal impact on Nordstrom cardholders, customers and employees.
Nordstrom said it is assessing how it will use the funds from the transaction.