A customer enters the closing down Sears store
A customer enters the closing down Sears store is shown in downtown Vancouver, British Columbia, September 13, 2012. Reuters/Stringer

Sears Canada Inc. (TSX: SCC; NASDAQ: SRSC) and U.S. bank JPMorgan Chase Bank, N.A. have announced the conclusion of their credit-card issuing partnership effective November 2015. The disclosure affects the Sears Card and Sears MasterCard credit cards.

In a statement, the U.S. bank said it had served a notice of non-renewal to the clothing and household goods retailer to prevent the agreement from auto-renewing once it ends on Nov 15, 2015. Relative to their partnership, Sears and JPMorgan said they could sell to another party their credit card portfolio. If this pushes through, JPMorgan will have to pay Sears Canada up to C$174 million ($153.9 million). There is no assurance however that such a transaction will be achieved or that the necessary circumstances for the payment will occur, both companies said.

Hit by strong competition, primarily by discount retailers, Sears Canada has seen its market share dwindle over the years. In 2013, it reported an operating loss of C$187.8 million ($166.19 million). It has also sold locations at many of Canada's top malls in order to keep the business afloat. U.S. parent company Sears Holdings Corp., in October, disclosed it will divest majority of its stake in Sears Canada to its shareholders through a rights offering.

Sears Canada is a multi-channel retailer with a network that includes 176 corporate stores, 222 Hometown stores, over 1,300 catalogue and online merchandise pick-up locations, 96 Sears Travel offices and a nationwide repair and service network. The Company also publishes Canada's most extensive general merchandise catalogue and offers shopping online at www.sears.ca.

Way back in 2005, JPMorgan purchased Sears Canada's credit card receivables business. This enabled Sears Canada to give a special dividend to investors that year. JPMorgan likewise agreed to pay yearly marketing and other fees Sears Canada as part of the agreement.

The tie-up, according to Keith Howlett, a Desjardins analyst, had pumped up Sears Canada's yearly earnings by over C$60 million in the early years of the 10-year contract, before interest and taxes. Reuters reported shares of Sears Canada were up 1.29 percent at C$11 late on Monday.