Bread Financial Holdings Inc (BFH, Financial) released its 8-K filing on April 24, 2025, detailing its financial results for the first quarter ended March 31, 2025. The company, known for its private-label and co-branded credit cards, loyalty programs, and marketing services, reported a net income of $138 million and earnings per diluted share of $2.78, surpassing the analyst estimate of $2.34. Revenue for the quarter was $970 million, above the estimated $953.37 million.
Company Background and Strategic Initiatives
Bread Financial Holdings Inc (BFH, Financial) was formed by merging JCPenney's credit card processing unit and The Limited's credit card bank business. The company is a significant player in the credit services industry, partnering with retailers to market its credit cards. It also holds a minority interest in LoyaltyOne, which operates a major airline miles loyalty program in Canada.
Performance Highlights and Challenges
The company's credit sales grew by 1% year-over-year, driven by increased general-purpose spending and transaction volume. However, the macroeconomic environment led to a 2% decrease in average loans, reflecting lower consumer spending and tighter underwriting standards. The common equity tier 1 (CET1) capital ratio decreased to 12.0%, impacted by the CECL phase-in adjustment.
In the first quarter, we continued to demonstrate our financial resilience with net income of $138 million and by increasing our tangible book value per common share to $48.92," stated Ralph Andretta, president and CEO.
Financial Achievements and Industry Impact
Bread Financial Holdings Inc (BFH, Financial) successfully executed a $400 million subordinated notes offering, enhancing its capital structure and increasing its total risk-based capital ratio to 15.5%. The company also completed a $150 million share repurchase program, repurchasing 3.2 million shares. These actions provide additional capital flexibility and opportunities to deliver value to shareholders.
Income Statement and Key Metrics
The company's revenue decreased by 2% compared to the first quarter of 2024, primarily due to lower finance charges and late fees. Non-interest expenses decreased by 1%, driven by a reduction in other expenses and card processing costs. The delinquency rate improved to 5.9%, and the net loss rate decreased to 8.2%.
| Metric | Q1 2025 | Q1 2024 | % Change |
|---|---|---|---|
| Revenue | $970 million | $991 million | -2% |
| Net Income | $138 million | $134 million | 3% |
| Diluted EPS | $2.78 | $2.70 | 3% |
| Credit Sales | $6.1 billion | $6.0 billion | 1% |
Analysis and Outlook
Bread Financial Holdings Inc (BFH, Financial) demonstrated resilience in a challenging economic environment, with strategic initiatives to optimize its capital structure and enhance shareholder value. The company's focus on operational excellence and disciplined expense management contributed to its improved financial performance. However, ongoing macroeconomic uncertainties and potential regulatory changes pose challenges that the company will need to navigate carefully.
Our first quarter results reflect our resilient business model, strategic credit tightening actions, and ability to deliver solid results despite a challenging macroeconomic environment," commented Perry Beberman, executive vice president and CFO.
Overall, Bread Financial Holdings Inc (BFH, Financial) is well-positioned to generate additional capital and deliver strong returns, while remaining vigilant in monitoring economic and consumer financial health.
Explore the complete 8-K earnings release (here) from Bread Financial Holdings Inc for further details.
