Sears’ Tab Likely to Soar in Credit-Card Case

Sears, Roebuck & Co. said Thursday that it expects to pay at least $178 million to settle legal actions involving credit card customers whom the retailer wronged in bankruptcy proceedings.

The tab could rise to $265 million or higher because of penalties that could be imposed in a class-action suit by consumers. All told, some analysts said Sears could end up paying as much as $500 million.

The settlement brings the No. 2 U.S. retailer a step closer to putting an embarrassing gaffe behind it. While the retailer has been praised for handling the matter swiftly, the resolution is proving painful.

“This will hopefully be behind Sears soon, but it’s going to be expensive,” Dillon Read analyst Peter Schaeffer said.

Sears shares fell 12.5 cents to close at $48.75 on the New York Stock Exchange.

Sears said it will take a charge, which it called material but wouldn’t detail, in the second quarter to cover the settlement.

The settlement stems from Sears’ admission in April that it didn’t file the proper papers in Bankruptcy Court after it persuaded some customers to continue paying bills that had been wiped clear by a judge--with some cases dating five years.

A separate $100-million agreement was reached Wednesday with the Federal Trade Commission, but the FTC said it will not pursue that money if Sears fulfills the Bankruptcy Court agreement.