Many retailers have established private-label credit card programs designed to encourage consumers to make large purchases on credit while also making money on the interest revenues from the credit - a win-win scenario. The problem, of course, is when people start to buy things they can't afford and default on their payments. This is what happened when the housing market collapsed and wiped out home equity lines of credit that many people were using to pay off credit card bills. Now, these companies are losing big bucks on their credit card operations. The damage is spreading from just banks to retailers and other institutions now...

From CNN Money:
Home Depot Inc.'s (HD) profit-sharing gains from its private-label credit card program fell in the fourth quarter and will continue to hurt operating margins in 2008 as portfolio losses increase, Chief Financial Officer Carol Tome said Tuesday. Home Depot shares profits from its private-label credit card program with card issuer Citigroup Inc. (C), though the retailer doesn't hold any of the receivables on its books. About 30% of all 2007 sales were generated through consumers using the credit cards.