Walmart Lawsuit Raises Doubts Over Synchrony's Sam's Club Renewal

(Bloomberg) -- Walmart Inc.'s lawsuit against Synchrony Financial is raising doubts about the lender's efforts to renew its partnership with Sam's Club, the retailer's warehouse subsidiary.

“This ends the discussion around whether Synchrony can retain the Sam's Club relationship,” Kevin St. Pierre, an analyst at Sanford C. Bernstein & Co., said in a note to clients Friday.

Walmart filed a lawsuit against Synchrony Financial on Thursday after negotiations faltered over whether to shift a $10 billion portfolio to its new partner, Capital One Financial Corp. Walmart accused Synchrony of breaching their agreement, while Synchrony called the suit “baseless” and said Walmart failed to uphold portions of the partnership contract.

The Sam's Club portfolio has about $8 billion in receivables and is expected to come up for bid soon. Synchrony has issued the warehouse chain's cards for 24 years.

Synchrony has said its five largest programs -- Gap Inc., J.C. Penney Co., Lowe's Cos., Sam's Club and Walmart -- made up the majority of revenue from interest and fees on its loans last year.

Synchrony shares dropped 5.6 percent to $27.80 at 8:12 a.m. in early trading in New York. The stock declined 24 percent this year through Thursday, compared with the 5.6 percent decline of the 67-company S&P 500 Financials Index.

To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Daniel Taub

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