Credit Costs Will Remain a Headwind for Bread in 2025, but Credit Trends Point to Stabilization

After the sale of Epsilon in 2019 and spinoff of LoyaltyOne in 2021, Bread Financial is solely a consumer credit company; its private-label credit card and buy now/pay later businesses are its only two product lines. However, Bread’s retail credit card business is under pressure as it continues to lose major partners, with Wayfair and Meijer going to Citi in 2020 and BJ's Wholesale Club to Capital One in 2022. We see retail partner loss as an ongoing threat to Bread as the firm does not have a competitive advantage that would give it an edge in retaining partnerships during contract renewal negotiations.