Citibank Ends Zale’s Canadian Private Label Credit Card Program

Citibank on Thursday notified struggling American jewelry retailer Zale that it intends to terminate the private label credit card program agreement it has with Zale’s Canadian subsidiary effective June 30.

The notice comes just two days after Zale announced that Citibank agreed to give it another month to pay the credit company $6 million for a shortfall in jewelry credit sales. Last year Citibank notified Zale that it does not intend to renew the Merchant Service Agreements, unless it pays the $6 million by April 1.

Zale Canada Co. received the written notice of termination from Citi Cards Canada Inc. on April 1. It is currently unknown if Zale failed to pay the $6 million or if the termination is taking place despite the agreement.

Zale said in a SEC filing that it has “initiated discussions” with other financial institutions to replace the agreement when it expires.

Under the agreement, Citibank provides financing for Zale’s Canadian customers to purchase merchandise through private label credit cards. The agreement also enables Zale to write credit insurance for its Canadian customers. According to the company, about 25 percent of purchases in Canada are financed by Citibank through the agreement.