David Jones to cash in on current credit card bonanza

By Martin Vedris

SYDNEY: David Jones will cash in on the Australian credit boom with their own credit card. Purchases on their in store charge card accounted for around 30% of their 2006 revenue but the credit card will earn them money on customers’ purchases outside their store.

David Jones announced today that it has shortlisted two candidates – AMEX and Citigroup – as the preferred issuer of the planned David Jones branded general-purpose credit card (GPC).

The news comes at a time when credit card usage is at all time high levels. As reported by the NSW Office of Fair Trading, Reserve Bank figures for February 2007 show that Australians had an average outstanding credit card balance of $2,952, up 8.1% on the same time last year and there were over 13 million credit card accounts with an average limit of $7,719, which is up 4.7% on last year.

According to a statement released to the Australian Stock Exchange today, the announcement follows extensive discussions and negotiations with an initial group of 11 local and international financial institutions. A detailed assessment of each candidate’s capabilities in a number of key areas was reportedly undertaken, including their operational capability, experience and understanding of combined storecard/GPC business models and their respective alignment with David Jones’ strategic objectives.

David Jones CEO Mark McInnes said, “The quality of final responses was excellent. Australian banks responded strongly and demonstrated significant capability in the domestic credit card market. International banks, although not as established locally, demonstrated strength managing store-branded credit cards globally. Our view was that in having this unique global experience together with the ability to build on existing local capability was a key deciding factor.

“Both Citigroup and AMEX are highly respected global participants in the credit card market. Most importantly both organizations recognize the value of the David Jones brand and the value of our existing store-card business and are prepared to invest heavily in both given the significant future growth prospects,” McInnes said.

The next step in the process will involve a due diligence assessment on Citigroup and AMEX as well as a process to determine which scheme is the best suited marketing partner (namely Mastercard or Visa), if Citigroup was chosen.

David Jones anticipates finalising agreements with the successful card issuer partner and scheme partner by October/November 2007 and launching its GPC between August and November 2008.

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