The retail landscape is undergoing a significant transformation as legacy brands seek new revenue streams through financial services. This week, Transformco, the parent company that emerged from the Sears Holdings bankruptcy, announced a strategic partnership to launch a new credit card platform called “Aress” by early 2025. The development marks a notable pivot for the company as it continues its post-bankruptcy evolution away from traditional retail operations.
According to industry analysts, this move represents Transformco’s attempt to capitalize on the profitable financial services sector while leveraging its remaining brand recognition. Financial details of the partnership weren’t fully disclosed, though sources familiar with the arrangement suggest an eight-figure investment. The company will work with Fidem Financial, a specialized financial technology provider with experience in private-label credit programs.
“Retailers are increasingly recognizing that financial services can generate higher margins than traditional merchandising,” said Michael Lasser, retail analyst at UBS. “What we’re seeing with Transformco follows a broader industry trend of retailers becoming financial service providers to create new revenue opportunities.”
The Aress platform will initially offer store-branded credit cards for Transformco’s remaining physical locations and online channels. The company operates approximately 120 Sears and Kmart stores nationwide, drastically reduced from the nearly 3,500 locations the brands collectively operated at their peak. Industry experts suggest the financial services pivot may help sustain the company’s dwindling retail footprint.
Federal Reserve data indicates retail-branded credit cards remain surprisingly resilient despite broader shifts toward mobile payment systems. Approximately 61% of American adults held at least one store credit card in 2023, generating over $100 billion in interest revenue for issuers. For retailers, these programs offer valuable customer data and typically higher interest rates than general-purpose cards.
“The margins in private-label credit can exceed 25% compared to single-digit margins in traditional retail,” explained Patricia Sahm, director of fintech analysis at Morningstar. “If executed properly, this could provide Transformco with a much-needed boost to their balance sheet.”
The announcement comes at a critical juncture for Transformco, which has struggled to maintain relevance in a retail landscape dominated by e-commerce giants and big-box competitors. The company has sold off valuable real estate assets and closed hundreds of stores since emerging from bankruptcy in 2019 under the ownership of Eddie Lampert’s ESL Investments.
Speaking at an industry conference last month, Transformco CEO Louis D’Ambrosio acknowledged the challenges facing the company’s traditional retail model. “We’re exploring multiple avenues to unlock value from our established customer relationships and brand equity,” D’Ambrosio said. “Financial services represents a natural extension of our customer-first approach.” The company declined to provide specific comments about the Aress platform for this article.
Financial technology partnerships have become increasingly common as retailers seek specialized expertise rather than building capabilities in-house. The arrangement with Fidem Financial will allow Transformco to outsource much of the technical infrastructure while maintaining customer-facing control of the credit offering.
Consumer advocacy groups have expressed some concern about the proliferation of store credit cards, noting their typically higher interest rates. According to the Consumer Financial Protection Bureau, retail credit cards charged average APRs of 26.72% in 2023, significantly above the 21.19% average for general-purpose credit cards.
“While these programs offer rewards and discounts that appeal to loyal customers, consumers should scrutinize the terms carefully,” warned Linda Sherry, director of national priorities at Consumer Action. “The convenience often comes with a significant cost if balances aren’t paid in full each month.”
The Aress platform appears designed to eventually extend beyond traditional store credit cards. Documentation filed with the U.S. Patent and Trademark Office indicates the platform may eventually incorporate digital wallet functionality, installment payment options, and loyalty program integration—positioning it as a more comprehensive financial relationship tool rather than simply a credit card.
Retail industry consultant Neil Saunders of GlobalData Retail sees the move as necessary but challenging. “Transformco is playing catch-up in a space where retailers like Target, Walmart, and Amazon have established sophisticated financial ecosystems,” Saunders noted. “The question is whether their remaining customer base provides sufficient scale for this initiative to succeed.”
Market response to the announcement has been cautiously optimistic. While Transformco is privately held, shares of Fidem Financial’s parent company rose 3.2% following the announcement. The credit services sector has outperformed the broader market over the past five years, with the S&P Financial Services Select Industry Index returning approximately 14.7% annually compared to the S&P 500’s 11.9%.
As traditional retail continues to face pressure from e-commerce and changing consumer habits, financial services diversification has become an increasingly common strategy. The Transformco-Fidem partnership represents a significant bet that the company’s future may depend as much on interest income as merchandise sales—a remarkable evolution for brands that once dominated American retail through their iconic catalogs and department stores.
