CMidd - 1:01 pm on Oct 27, 2011 (gmt 0)
They make more money from interest on the products, and insurance "warranties, protection plans, etc" then the products themselves.
interest on a $1000 item could add up to $300, and the interest is on the retail prices, not wholesale cost. Meaning a $1000 item could cost $500-$600 wholesale. Add $49.99 to $99.99 insurance plan that typically yield 80% profit. And they are rolling in dough.
Also include interest, penalty "late fee, etc" on low credits lines "things like clothing, consumer electronic, etc" and you have a ton of recurring income Interest + Fee charged on Retail "not wholesale".
They can finance $150 "wholesale" worth of clothing, that retail for $500, and earn 9% to 19.99% interest "plus possible late payment fees" on $500 (from $150).
I read an article somewhere, that Sears operates more like a Bank then a retail store, and it's finance division generates the bulk of it's revenue.