The Daily Guardian: Macys Highlights Concerning Credit Card Delinquencies
Title: Macy’s Faces Surge in Credit Card Delinquencies as Financial Stress Mounts
Subtitle: Increasing consumer leverage metrics and broader financial pressure lead to record-breaking delinquencies
Date: [Insert Date]
By [Author Name]
[City, State] – Macy’s, one of the leading department stores in the United States, is grappling with a surge in credit card delinquencies, suggesting that consumers are facing mounting financial stress. As the post-Covid economy slowly recovers, the company had expected delinquencies to rise. However, the magnitude of the uptick caught Macy’s off guard.
The latest statistics reveal that Macy’s credit card revenue has declined by a staggering 36% year over year, with the increase in delinquencies being identified as a major contributing factor. Furthermore, the company anticipates a further rise in “bad debt” in its credit card portfolio due to worsening consumer leverage metrics.
Macy’s attributes the spike in delinquencies to the broader financial pressure consumers face, including rising debt levels across various segments such as credit card balances, student loans, auto loans, and mortgages. Recognizing the severity of the issue, the company is actively collaborating with its credit card partner, Citibank, to minimize exposure to higher-risk segments.
The gravity of the situation is underscored by alarming data from the New York Federal Reserve, which reveals that consumer credit card debt surpassed $1 trillion during the second quarter of the year, reaching an all-time high. Additionally, Moody’s Investors Service has reported that new credit card and auto loan delinquencies have now surpassed pre-Covid levels.
While the impact of the surge in delinquencies is being felt across the industry, smaller banks are particularly vulnerable, with record highs in credit card and auto loan delinquencies surpassing the spikes witnessed during the Covid pandemic and even the Great Recession.
In a related development, Foot Locker, the popular footwear retailer, recently suffered a major blow, experiencing a 30% plummet in its shares. The company has attributed this downturn to “consumer softness” and has consequently lowered its outlook while also suspending its dividend.
These alarming trends in the credit industry paint a worrisome picture of the financial hardships faced by consumers. As society grapples with the aftermath of the pandemic, it is crucial for retailers, banks, and policy-makers to closely monitor the economic landscape and implement measures to alleviate the burden on consumers.
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