Rebranded Bread Financial rolls out Victoria’s Secret co-brand card amid digital refocus

The news: Bread Financial (formerly Alliance Data Systems) expanded its partnership with Victoria’s Secret by renewing their private-label credit card and launching a new co-brand card, the Victoria’s Secret Mastercard, per a press release.

More on this: The Victoria’s Secret Mastercard offers cardholders 5% back in rewards on Victoria's Secret and Pink purchases and 7.5% for gold tier loyalty members.

The card also enables rewards outside of the brand: Customers earn 2% back on bonus categories like travel, dining, and streaming and 1% for all other purchases. Cardholders also receive a $30 activation bonus if they spend $500 outside of the retailer within 90 days of activation.

Why this matters: Bread is a market leader in the co-brand landscape and is widening its moat with this new card.

• Co-brands historically account for about $1 trillion in annual spending. And in August 2021, we estimated that Bread issued 22 co-brand programs—more programs than any of its peers. Victoria’s Secret’s big footprint should help solidify Bread’s market leadership: Victoria’s Secret has close to 1,400 retail stores and notched $6.79 billion in sales last year, up 10% annually, per Q4 earnings.
• Victoria’s Secret customers may view the co-brand more favorably than the private-label card thanks to the comprehensive perks it brings outside of the brand, which are on par with many general purpose cards. This could help build out the program—which composed 10% of Bread’s overall receivables in 2019—and accelerate growth: Bread’s credit card sales hit $29.6 billion in 2021, up 20% year over year (YoY).

The bigger picture: The Victoria’s Secret card rollout comes on the heels of Bread’s rebrand from Alliance Data, assuming the identity of the buy now, pay later (BNPL) startup it acquired in 2020.

• Bread plans to become a tech-forward company and will shift its strategic focus to include more direct-to-consumer products. The issuer will have to innovate its card programs to keep up with competition—Goldman Sachs, for example, is ramping up its digital co-brand offerings.
• Bread will also need to embrace shifts in the retail co-brand card space like tailoring solutions to customer preferences and embracing omnichannel programs and personalization. Issuers have launched many new co-brand credit cards in the past year, so providers should look to those programs to help nail down customer expectations.