There we go. Okay. Good afternoon, everyone. Thanks for joining us. We're very pleased to have the management of Bread Financial with us. Bread is a leading private label credit card issuer who in recent years has added a number of co-branded proprietary programs to its base. We've got both the CEO, Ralph Andretta, who before joining Bread, was the head of U.S. cards at Citi and had leadership positions at both Bank of America and American Express before that. Perry Beberman, the CFO, he joined Bread from B of A, and been part of the management team that B of A acquired with MBNA. We'll do a fireside chat format, and if there are questions from the room, we can perhaps entertain those as well.
Maybe to start it off, Ralph, can you talk One of the objectives that you've had as a, you know, when you as you've kinda developed the management team was to become more like a bank. Can you talk about what you've already done and what's left to be done at this point?
Yeah. We started this transformation about 3 years ago, you know. In fact, I just reached my three-year anniversary about two weeks ago. I'm remembering I joined then Alliance Data in February of 2020, and then in March of 2020 COVID hit. Right. We had really three good weeks. Our objective was to focus our energies on where the profitability was.
You know, we took a step back and said, "You know, we have these ancillary businesses," and our focus was we need to spin off and simplify our business. 'Cause we were a, kind of a puzzle of many businesses, all unrelated, by the way. There was no rhyme or reason why we bought such businesses. You know, we spun off two of the businesses and then focused on, you know, unsecured lending and building a team around that. Basically a, you know, a management team, as you mentioned, Perry, and our management team comes from, you know, the big banks, and as we move towards, you know, working here. To be more transparent with investors. That was another wrap on ADS. They weren't very transparent with investors, and they would surprise investors.
For us to be, you know, have metrics, be more transparent, when we went to the investor community. Also building a balance sheet was very important to us. We had a balance sheet that was very anemic. We had high double leverage at the parent. You know, a balance sheet that was just not a balance sheet that one would wanna be comfortable with when in unsecured lending. We built a balance sheet over the last couple of years. Then we leaned heavily into digital, and to, you know, digitizing our company from acquisition, through customer experience, through collections and digitizing our company. It's been, you know, three years of focusing on this unsecured business. We filled some product gaps too as well.
You know, where we are today, we feel very good about the progress we've made. We've modernized our technology. We were homegrown, you know, homegrown legacy system. We're now in the cloud with state-of-the-art technology. We feel good about how we're moving forward, and we continue to add good talent to the organization.
Got it. Okay. We have no choice but to discuss the topic of late fees and CFPB flaws in their analysis. You know, by and large, we support, you know, we support the ABA and what they're talking about in terms of, you know, good regulation, but being fair and judicious in the regulation and keeping competition up. This proposal does none of that.
I don't think it considers the cost to collect or all the things that one has to do as we move forward. You know, we've, you know, spent a bit of time internally, gaming what might happen and how you might look at it. At the end of the day, what will happen is, you know, the 80% who are on time will pay for the 20% that are not on time through increased APRs, maybe fees on cars and a variety of things. You know, to me, it's interesting. If I got a speeding ticket and it was $8, I would always speed. It wouldn't make a difference to me. If you make your payment late and it's $8, it's inconsequential.
What is consequential is you're gonna get reported to the bureau. That has ongoing ramifications. I think those are the unintended consequences that you might see from, you know, from this late fee legislation. You know, we've been talking to our partners, and clearly, we don't wanna put, you know, the onus on the backs of our partners. You know, that's not our intention, and we'll do everything we can not to do that. At some point, you're gonna look at raising fees, working with your partners, and then you're gonna really reevaluate how you underwrite. You know, people that need credit may not be able to get it. More to come. You know, we're in a kinda comment period now.
I think there'll be some thoughts you know, past that in terms of process and what's going to happen. For us, You know, it's no impact in 2023, and we're estimating what might be the impact going forward. You know, we're doing all the what-if scenarios at this point.
Gotcha. kind of a somewhat confusing macro environment here. You know, We were coming into 2023, we were prepared for a weaker economy. Employment has been stronger. Unclear whether that's, you know, the way things are going to continue or not. You know, can you give us any sort of update on your thinking and, you know, in the context also, I guess you've kinda put out your numbers for the month of January a touch early so that, you know, you can probably kinda reference them in that process. Maybe talk a little bit about where things are and how it, you know, kinda impacts your views of for 2023.
I'll let Perry take start.
Yeah. As I think about, you know, 2023 where we exited. 20 22. I already headed to 2024. It's.
Why don't you just start that then?
I know. It's just these years are blurring. You know, the inflationary environment is remaining a little elevated as we saw from this morning's report. What we're seeing in terms of the impact to the consumer is what one would expect, right? It's creating a bit of a, I would say a cold. The portfolio has a cold, meaning the middle America is feeling it. It's not the same as when there's high unemployment or elevated unemployment, where a few of the people are severely sick. This creates some pressure across the portfolio. That's why, as we've discussed in the past, the Fed is, you know, working its way with higher rates, trying to tamp down that inflation and get prices back under control. That will help cure, you know, middle America.
With that, you're starting to see the announcements of a, you know, pullback in jobs, with a lot of companies announcing layoffs. What's interesting with this is the small business job market remains really robust. What happens with unemployment in the back part of the year, it's anybody's guess. I, you know, I really wish I had that crystal ball that will give us the answer for that. What our guidance was indicating is w hat I'll say is the inflationary pressure is getting replaced a bit by what could be a little bit of rise in unemployment in the back part of the year.
You know, for us, in particular, we're going, you know, as you referenced the net credit loss number we posted today, we do expect it to increase sharply in February by over 100 basis points due to last July's transition item. Then again, we expect a couple months to be, you know, uncharacteristically high in the Q2 related to similar things in the back part of 2022. We get that part of the behind us, then you're more so thinking about what's going on with the economy. What we've said so far for what we think is gonna happen and what we're seeing is that we should start to see some moderating loss rates in that back part of the year.
Got it. Okay. One of the other elements of your guidance for 2023 was that reserve rates could increase by up to 100 basis points.
Yep.
You know, is that a function of changes in the economy from here? Is that a function of? I mean, let's leave it open to you. What, I mean, what is driving that thought?
You have two things that are gonna drive it up in the immediate quarter. One is the BJ's portfolio going out. It currently is on the books with a lower than portfolio average reserve rate. When that leaves, expect a good piece of that increase to be just the math of that leaving. Then as well, you have transactors in the portfolio who pay off their accounts in the Q1. They're out, yet the losses that we were expecting from those accounts at the end of the year are really still with you. Those are the two components.
There was a smaller component that was, yes, they're just signaling if the economy continued to show signs of economic deterioration as had been happening all throughout 2022, just signaling it could go higher from there a little bit. That was our best thinking at the time when we gave that guidance.
Gotcha. Ralph, we talked a little bit. You talked a little bit about this just a moment ago with respect to your interaction with your partners. When you think about where we are in the competitive environment in private label and co-brands, like I mean, what's going on from a competitive standpoint? Do you see issuers, you know, being more aggressive, more disciplined, you know, in bidding for these contracts? Are there, you know, any other, you know, portfolios that you're thinking about? Obviously, you've kinda had some fairly big movement both in and out relatively recently. You know, where are we in that?
You know, you know, 2021, I would say, was an irrational year to collect receivables. You know, we saw some, you know, and BJ's being one of them, you know, a big move, you know, on BJ's in terms of wanting to get that portfolio to the point where, you know, it would've been irrational for us to continue to bid. I will point to in 2021, I, and, you know, my team is sick of hearing this, but we went 20 and one in 2021. We had 10 wins, 10 re-signs and one loss. Eh, it's a good record. And 2022 was similar. You know, we're winning, we're winning portfolios more than obviously we're losing portfolios.
If you look at our book, over 85% of our book now are receivables is secure through 2025, when you take out BJ's. That's a good number and a good level of, you know, good recurring quality earnings as we move forward. To be, you know, to be honest, one of the things I really love about this company is that we can bid up and down the spectrum. You know, AAA came in, we took that from Bank of America. The NFL, we got from Barclays. Those are, you know, we're competing with the big boys at that point. Also there's that middle market where we compete, you know, really strongly.
You can pick up those $100 million portfolios or grow those $100 million portfolios where the earnings are really good, the customization is minimal. You know, you sign kind of long-term deals with those guys, and you pick up five of those or eight of those, it's almost $1 billion of really good earnings and really good returns with not a lot of heavy lifting in terms of execution. That's something. You know, I love how we bid up and down, up and down the spectrum. I think competition's always gonna be high.
Yeah
in these portfolios. When we look at something, you know, we look at it and say, "Can we grow it, and can we grow it profitably?" Those are the important things. We could put on portfolios and, you know, do it at, you know, very slim or minor economics. We're out of that business. We look at portfolios that are accretive to our overall portfolio, and that's what we go after.
When you think about those areas of, you know, those kind of smaller mid-sized partners and portfolios. Are there any, you know, any kind of themes there? Is it any specific type of retailer? Is there any, you know, any kind of, you know?
You know, we've diversified our retailers. One of the, one of the verticals that's been you know, terrific for us is beauty. That has, you know, stood the test of inflation. I think it will stand the test of recession, which is, you know, terrific. We've, you know, Ulta, Sephora, you know, we have market share in that vertical. Another one for us is jewelry as well. That, you know, that ebbs and flows with the economy, that's a really good
Yeah
vertical for us. Now we've been moving more towards, you know, the digital verticals as well. If you think about our acquisition of Bread now called Bread Pay, and our, and our arrangement with Fiserv, I'm sorry, with Sezzle. We have over 200, you know, 200 merchants now that we're their installment loan partner. We're seeing, you know, diversification across verticals and across types of products we're delivering to the marketplace.
Maybe we can kind of spend another minute on Bread Pay.
Sure.
When, you know, how do you think about how much of your company that's gonna represent in terms of receivables? Are you getting primarily like pay-in-four customers? Are they actual kind of installment loan customers? How do you see that evolving over time?
Yeah. We bought, we bought Bread at the end of 2020. cause we, you know, we felt we had a product gap, certainly in paying in BNPL and, you know, paying for an installment loan. You know, it was the shortest distance between two points to buy Bread. One of the first things we did is we stepped back and said, "Now we've gotta make this product compliant and regulatory compliant," which was the right thing to do at the right time. I don't see it as, you know, an overwhelmingly big part of our portfolio. I think it is a set of products in our product set. I think it'll grow responsibly over time. You know, the pay-in-four environment got irrational in 2021 and 2022.
You're seeing that now with the valuation of Afterpay and Klarna and all of them, where they paid these big bonuses and really for just some eyes on glass.
Right.
What we did is we took a step back from that and said, "The real profitability in BNPL is an installment loan." You have to grow that steadily with good underwriting, good collections, and a variety of things. I feel good about where we are. We, you know, I always joke, we got a set of products, and we got a new name out of it.
Right.
So.
Right. Okay. Maybe kind of Perry, maybe if you think about your expectations for balance growth, are you able to, like, parse it out between what's coming from the existing book and what's coming from the new portfolio, some of the stuff that Ralph was talking about in terms of, you know, the potential to add? Like, how do you think about that both for 2023 and sort of in general? Like what's the, you know, what's the normal way to think about it?
Yeah. When I think about what we're seeing in our portfolio, we obviously had really good growth this past year. We guided to the mid-single digits for 2023, and that's growing mid-single digits with the loss of BJ's happening in the Q1. If you were to normalize our guidance that as if, you know, BJ's was still in there, you'd be looking at mid-teens growth. That's really coming from things that, you know, Ralph commented on earlier.
It's a, it's a diversified growth, you know, approach, where we're getting that from de novo partners that we have put on last year, from really strong existing partners where we have renewed or refreshed the products, trying to grow the pie with them, leaning a little bit more on our proprietary products and the, you know, the branded products with the cash Amex cashback 2% card with Amex. We can lean a little bit more on the installment loan. It's gonna come from across a spectrum of products that we have in place and being opportunistic.
There's a pipeline of new partners, but it's really what this company's been positioned to do is to opportunistically grow and, you know, I'll say lever up or down based on the economic returns to make sure we're driving responsible growth.
Maybe talk about that Amex, you know, cashback product for a second, 'cause I think it will likely be a big portion of, you know, your proprietary product set. You know, I mean, what, y ou know, talk about the genesis of it and, you know, what your plans for it are over, you know, kind of a multiple year period.
Sure. Well, let's just, you know, have a soft spot for Amex being an alum. You know, running on their network gives you a few things. One, the, you know, the benefits are terrific and, from their network and really enjoy those benefits. There's also, a little bit of a cachet with the name and brand as well. For us, putting a 2% cash card in the market, underwriting the way we do, is beneficial to Amex 'cause they can cast a wider net on acceptance and a variety of things. You know, that's good for them. For us, it's every swipe is profitable. Where, you know, from an interchange perspective.
We're able to give that 2% to customers, without it, you know, degrading that economics because of the interchange we get from being on the American Express network. You know, I think the portfolio has grown nicely. I think it will continue to grow over a period of time. It's, you know, we're very focused on that portfolio being primarily digital. So you could acquire the card, put it in your wallet and begin spending within 30 seconds.
Right.
Which is, you know, kind of like Apple-ish type card. You know, right now we've seen, you know, and you know, we've seen, you know, millennials attracted to our portfolio, Gen Xers and, you know, and some baby boomers, and we're, you know, it's revolving nicely and, you know, Amex has been very helpful in terms of, you know, co-collaborative marketing funds and a variety of things. We're happy to, you know, happy to do that, happy to see it grow. We have a Master, you know, our first foray into direct to consumer was with a Mastercard portfolio, and that portfolio has a million customers in it. That was as a safe tool.
You know, it, you know, just worked out well enough that we are, you know, we have almost a million customers in that portfolio now. We expect that this again will be a nice part of our portfolio, and it just balances out, you know, our PLCC and co-brand. We're diversifying our portfolio all around.
You mentioned the digital aspects of that Amex card. You also had mentioned it kind of as part of the, you know, the process, you know, that you kind of adopted as you came in to the company. Maybe can you give us an update about how that, you know, that process kind of sits across all of your products now? Like, at what point are you at in that area?
You know, we like to say our motto is mobile first, right? We wanna be where our customers wanna be. In this Q1, we'll be launching our mobile app. Never had one before, you know, a mobile app where people can, you know, look at their multiple accounts, pay their bills. I think for us, that's a, you know, a good milestone. Prior to that, you know, we were, it was, you know, digital was an afterthought, not a primary thought here. That's why we invested heavily. You know, with our partners, we've implemented an enhanced digital suite. Now we have, you know, more than half of our partners now have this digital suite where, you know, they could pull down on capabilities, and it's easy. It's API driven.
You pull down the capabilities and products with our partners. You know, first we had to put the right structure in place, then have the right digital assets in place, and now we're starting to reap the benefits out. We have a virtual card where you can go, literally go into a store at point of sale and have an installment loan on a virtual card. A lot of state-of-the-art things we're starting to do. You know, it's, you know, I always equate it to when I lived in India. It's the first time I ever saw the real use of a mobile phone because they leapfrog like landlines. We're able to like leapfrog some competition because we didn't have any legacy technology to replace.
Got it. Okay. Shifting back to credit for a second. Perry, you laid out this idea that you've got a couple of kind of bumps in the early part of the year. When we kind of look at the data as it's coming out and obviously, probably have to wait fully to get past those points. What are the things we should be looking for, to see that you're tracking to your expectations? Like, what is it that we'll be able to see from the outside?
Yeah. I think once you get past, you know, midway through the Q2 , then you'll see the normalized delinquency. You can probably start to see some of the early-stage delinquency obviously leading into the Q2 . We've got to get midway through that in order to have the conversion noise behind us. The actions we've taken around tightening credit underwriting on the margins, managing lines, the things you normally do is you deploy your recession readiness playbook should start to happen. Hopefully, you know, inflation continues to moderate through that period, which also will produce some relief for the consumers. You know, again, the question is really on the back part of the year, what then happens with unemployment? Do rates continue to remain?
I'm talking about cost of funds rates, like, lending rates for consumers remain elevated, puts pressure on their auto loans and mortgages. Is there other knock-on effects on the back part of the year into next year.
Right. As you look across your portfolio, you know, the any difference whether it's kind of the, you know, general credit of the consumer or the type of card, you know, between a, you know, private label card or your, you know, some of your proprietary cards? Any difference in terms of the performance that you'd wanna call out as being, you know, noteworthy?
I think what you're seeing is there was normalization that was happening earlier in our portfolio as the stimulus had worn down. That was to be expected. We've been talking about that for over a year. As well, I think that population feels the impacts of inflation clearly more so than the high-end customer. What you're seeing is you're starting to see things up and down the credit spectrum, but it's more so income dependent, right? Households less than $100,000 in income are all starting to feel the effects of inflation. Granted, it varies a little bit if you live in Idaho versus New York City, but nonetheless, it's. You're starting to see it up and down the spectrum there.
Gotcha. Ralph, one of the things we were talking about in terms of, you mentioned kind of balance sheet becoming more bank-like. Maybe can you talk about that a little bit more? You know, what are the metrics you're looking for? Obviously, you have reduced double leverage with the sale of some of those. You've got, you know, perhaps some debt pay down. I mean, how do you think about that path and then, you know, at what point are you ready to think about, you know, returning capital?
Yeah. If I look out over the next two years, right? You know, we've, we're gonna continue to reduce our double leverage at the parent. We've made a, you know, dent in it. Now we need to make a bigger dent in it figure, you know, I don't think we'll ever have no debt at the parent, but we're gonna have debt at the parent, but we're gonna have manageable debt. You know, we're gonna continue to build our ratios, our balance sheet ratios by having good quality, repeatable earnings. When you get to the 9.5%, you know, TCE ratio that, you know, now we're competitive land, right?
We've got to get through this kind of cycle in 2023 in terms of, you know, loss rates peaking and coming down. I think we've got to manage through that appropriately. We've got to kinda figure out, you know, what is the CFPB late fee, you know, outcome and, you know, how, and how do we close those gaps. Now you're into 2024, and at the end of 2024, then say, "Listen, I've got good capital, I've got my debt under control, I've done some refinancing. I'm seeing, you know, I've got some wind at my back." You know, now is the time to have that serious talk about, you know, returning capital to shareholders. That's kind of the way I think of it. Always investing in the business.
You know, we're focused on positive operating leverage throughout the cycle irrespective, but always investing in the business. You know, we have, you know, while we continue to invest in digital and product, you know, you moderate your investments in marketing and other things to make sure you deliver that positive operating leverage. I think, you know, 2024 is a year when, you know, you get some of this current noise behind you and you move forward, and then you have that serious discussion about returning value.
Got it. One of the things that you did over the last two years in that whole process was, you know, kind of expand the consumer deposit base, you know, fairly significantly. Can you talk a little bit about, I mean, you know, and it's, it is kind of interesting because I think in general, online banks probably had a little higher, deposit rates, deposit betas during 2022 than some would have thought, including me. You know, but probably still beneficial from the perspective of how you were building your funding. Just talk a little bit about that, you know, the, and how you're thinking about deposit pricing and you know, and how that's gonna affect your net interest margins going forward.
As you noted, we've been on the higher end of the rate table, proudly, because we don't have a big brick-and-mortar system which adds extra cost to it being predominantly a digital Internet bank on that side of things. You know, when prime rate goes up, as the Fed funds increase rates, prime goes up commensurately. All of our variable price loans go up very nicely, and therefore, we can pass along almost all of that onto higher deposit rates. We haven't passed it on basis point for basis point, but we're very comfortable moving that along and trying to be pretty much net interest margin neutral. We're not trying to be more asset sensitive or more liability sensitive, so we're fine managing on that front.
I think it's a competitive advantage in this environment where, you know, the big companies that have these behemoths of a back book of deposits are a little apprehensive about moving as quickly when they've got as many deposits that would be repricing. We're growing into it. As you noted, it's a very attractive funding mechanism for us compared to brokered CDs or other things that we have as funding options. It's a good way to fund. I think Ralph laid out a couple of years ago that our objective was to have directed consumer deposits represent 50% of our funding while growing our portfolio. It's gonna remain a very important part for us.
Got it. Okay. I've got a couple more questions, if there are any from the room. We can get you a mic if anyone's got one. Okay. I don't see any. I guess you sort of, you alluded to this in the prior answer. Your loan yields are predominantly variable, right? You will get that. There's not a lot of, like, you know, big use of introductory rates or things like that. You're gonna have a step up in yield that kinda is commensurate with, you know, balances and any changes in the prime rate. Is that fair?
Yeah, that's fair. We, you know, there is some promotional pricing, some big ticket purchases.
Right.
We don't have a big, you know, balance transfer book that's at 0%, and we certainly don't have a lot of fixed rate loans like auto loans and that type of thing in our book. We don't have any of those, in fact. Yeah, we're.
Yeah. Perry talked about operating leverage. Can you kinda amplify a little bit your thoughts, both of you gentlemen, you know, Ralph and Perry. You know, as you think about the expense outlook for the company, what investments you have to make and how that translates into, you know, kind of, the operating leverage that you'd see in 2023 and beyond.
Yeah. Well, you know this business very well. You've been covering it for a long time. If you don't invest in this business consistently, it takes a lot of money to jump-start it. I think we've done that. We've successfully jump-started this business. If you look at our expense growth in 2023, it's moderated from 2022. Our expense growth is less as we move forward. We're continuing to invest in digital technology, which is critical for us as we move forward, and new product development. Without that, we're gonna, you know, we get crushed. What we'll do is we will set, you know, not only positive operating leverage, but efficiency ratios as we move forward.
What's the right efficiency ratio for this business as we move forward? You know, today we're competitive. We're, you know, we're probably the if I look at efficiency ratios, right up, we're in the middle. And, you know, I think, you know, could we do better? Possibly so. So once we get that, you know, past, you know, this initial investment period of catch-up, our consistent investments will, you know, and the investments we've made will yield benefit as we move forward. I expect that, you know, we'll have positive operating leverage, and our efficiency ratio will get better over the next three years' time. You know, and again, we have levers now to pull down on, you know, if we don't see the revenue coming in as we thought, we've got levers to pull back on.
You know, there's always a minimal amount you've got to invest in this business to be viable. I think, that wasn't done prior. I think we'll do that now, so we won't make that mistake again and continue to invest in this business. You know, I see opportunities to increase our, you know, our operating efficiency and efficiency ratios.
Good.
For us, I think we think about 2022, we still had to have that step up in investment. We don't have to have the step up this year. That's why when we guided, you know, to the mid-single-digit loan growth with revenue growth in line and then nominal positive operating leverage basically means expenses will grow in that range. That tells you that we didn't need the big step up investment. As Ralph just commented, you know, you have a mixture of those investments that you're making. Some of it's marketing, but we are very smart and strategic about marketing. Make sure we're not chasing the high-cost accounts that don't have the returns.
You have the table stakes tech stuff you have to do that whether it has returns or not, it's something you have to do to modernize, stabilize, be compliant. Then you've got the digital investments that are great because those will lower your cost to serve. The fact that we have not had mobile capabilities out there, and so as Ralph talked about the investments that weren't made are now being made. When that deploys later this year, that's gonna produce real nice benefits into 2024. You're giving the customer access to things the way they want to be serviced. That's gonna be a new channel for us to deploy. I think there's, those are examples of things that will help us.
Okay.
I see a question in the audience.
Oh, we got a question? Sure. No. We'll repeat the question.
Yeah, just a quick,
Oh, now we can.
Thank you. Just a quick question for me. I know you mentioned beauty as being a sector of growth for you. Was wondering if you could maybe dive a bit deeper into trends you're seeing there or any other particular areas of growth that are a focus for you?
I'm sorry.
Beauty.
Beauty.
Beauty is a sector.
Beauty. Yeah.
Yeah. Well, we've seen steady growth in a beauty sector. We've migrated from just a private label card to a co-brand card. People now can use that card for other spend and get rewards in their particular brand. Ulta has been a really terrific partner of ours. We've grown with them over the past, you know, couple of years and, you know, we've signed a long-term renewal with Ulta, and we're seeing really good results. You know, that industry holds up well through the cycle, and it continues to hold up well.
Yeah. That, that's the part that I think when Ralph and I looked at the numbers and when you're expecting as we were watching what was happening in 2022, and where you're watching discretionary spend shift to non-discretionary, there was nothing shifting out of beauty. That, I think, caught us both by surprise, like how important beauty has remained as a staple. Now they made as inflation went through, is pulling through, and prices were increasing in product in stores like Ulta and Sephora, they might have gone from the top shelf to a middle shelf or from the middle shelf to a lower shelf, but they were still spending the same basket of goods in beauty.
I think that was an encouraging sign and something different than perhaps what we would have expected 'cause, you know, some people may think that's more of a discretionary spend.
They say.
It turned out to be more sticky.
You know, having two daughters in their 20s that lived at home during COVID and still do, it's a repetitive industry, right? Where you have, you know, big ticket like jewelry or furniture, it's a one and done. This is just a constant repetitive replenishing of product. Not only replenishing, but adding different product as they move forward. You know, it is a very, you know, it's an interesting industry where, you know, it's nothing is recession-proof, but it's an industry where, you know, I think holds up nicely during this process because the goods and services are not exorbitant, but they're consistent and people rely on them as you move forward. We're very pleased with our partners in beauty.
They do a great job.
Okay. Not seeing any others. I'll ask, you know, one final question, maybe. Ralph, as you kinda sit back and say, you know, what's the most important thing you've got to get done this year?
You know, I think a couple of things. One is, we've got to get all of the value out of the investments we've made. I think that's critically important, right? We've got to hold ourselves accountable all the investments we made in 2021 and 2022, and make sure we get that value out of it, and recognize how value was before. I think that's critically important. You know, you know, the elephant in the room, what's gonna happen with late fees? How do we address that? How do we make sure we are, you know, ahead of the curve there? We're not out in front too far where we look silly, but certainly anticipating what's gonna go on and ensure that we close the gap, just like we did with Card Act.
I think that's critically important in 2023. Managing credit thoughtfully. You know, I think that's critically important for us in 2023, where we wanna give people the ability to spend, but we wanna do it in a thoughtful, you know, responsible way. I think that's the way I look at 2023. You know, and I think we'll add partners, new partners will come, and I'm excited about, you know, our pipeline, which I think is fun. You know, continue to add to our digital, you know, our digital capabilities. I think that's critically important as well. Shaping up to be a really interesting year
Interesting.
you know, you know, without the late fees, would have been a little less interesting.
Less interesting, yes.
What I like the most is, you know, I've got a management team that, you know, I'll say we're experienced, which is in other words, old, but we've been through this before, and we've been through cycles before. You know, between Perry and I, there's 70 years of experience in the card business on this stage. You know, if I put two more people on, there'd be 150 years of card experience on this stage. That's valuable in this type of environment because we've, you know, we've seen it, we're very thoughtful about it, and we're gonna make the right rational decision to move forward. That's what makes. Quite frankly, sometimes that's what makes it fun to work with people that you know are have that experience.
Please join me in thanking Ralph and Perry for their time today and their insights on Bread Financial.
Thank you.
Thank you.