Synchrony's Credit Numbers Are Improving Even as Inflation Bites. Is the Everyday Consumer Tougher Than Feared?
Synchrony provides card services to retailers, which can leave the company exposed to riskier consumers.
Overview
Synchrony (NYSE: SYF) has been around for a long time, but it only ventured out on its own after being spun off from General Electric following the Great Recession. It provides private-label credit cards to retailers, including industry giants such as Amazon (NASDAQ: AMZN) and Walmart (NASDAQ: WMT). There's just one problem: offering store cards often leaves it serving lower-credit-quality customers. Here's what you need to be watching right now.
Working with retailers like Amazon and Walmart is attractive, but they are just two of many companies being served. The bigger story here is that Synchrony is taking on the financial risk of providing revolving credit facilities to customers of many retailers. Retailers want to sell their wares, so they are happy to see credit extended to just about any customer, including those with lower credit scores. Synchrony is happy to oblige because such customers can be very profitable when the economy is strong.
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Originally published at www.fool.com.