The hits merchants are taking from the Covid-19 pandemic were apparent in the second-quarter financial results the big retail and cobranded card issuer Synchrony Financial reported Tuesday, results which include a 19% year-over-year drop in purchase volume.
Stamford, Conn.-based Synchrony posted purchase volume of $31.2 billion versus $38.3 billion in 2019’s second quarter. Excluding the sales of its Walmart and Yamaha consumer card portfolios last October and this January, respectively, volume on a so-called core basis declined 13% year-over-year.
Net earnings plunged 94% to $48 million compared with $853 million a year ago. With many consumers now unemployed or underemployed because of business closures or reduced operations due to the pandemic, Synchrony increased its provision for credit losses by $475 million, or 40%, to $1.7 billion.
There were some bright spots, however. After dropping 21% year-over-year in April, retail card purchase volume improved to a 9% fall-off in May and broke even with last year in June. Total purchase volume, which includes Synchrony’s promotional financing operation and Care Credit financing program for health-care and veterinary purchases, was up 3% year-over-year in June.
Some 48% of retail card sales were made online in the second quarter, and 60% of total payments were digital, Synchrony reported. The company launched a new card program for Verizon Communications Inc. in the quarter and renewed programs with several existing merchant clients, including Car-X Tire & Auto.
“As we navigate this new environment, we remain acutely focused on the future of our business,” chief executive Margaret Keane said in a statement. “We believe we have an advantageous position as the shift to digital has accelerated—we will continue to prioritize investments to augment our digital assets and capabilities to meet the rapidly evolving needs of our cardholders and partners.”