How did BFH's Q4 earnings surprise impact annual performance?

Bread Financial Holdings (BFH) experienced a decline in earnings for the quarter ended December 31, 2024, with EPS coming in at $1.84, compared to $3.46 in the same quarter of the previous year. This negative performance was a surprise, as analysts had estimated a higher EPS of $1.89 for the quarter. The decline in earnings can be attributed to a 4.7% decrease in revenue compared to the same period the previous year, as well as strategic initiatives aimed at navigating challenges in the current economic environment.

The impact of this earnings decline on BFH's annual performance can be significant, as it reflects a decrease in profitability for the year. However, it is important to note that BFH has taken steps to address these challenges, such as repurchasing $262 million of convertible notes, which demonstrates a commitment to growing responsibly. The company's tangible book value per share increased by 12% year over year, and the common equity tier one capital ratio increased by 40 basis points year over year, indicating a strong capital position.

Overall, while the Q4 earnings decline may have a short-term impact on BFH's annual performance, the company's strategic initiatives and strong financial metrics suggest a resilient and stable financial position in the long term.