By Sam Boughedda
Capital One Financial (NYSE:COF) shares sank more than 4% in premarket trading Monday after The Wall Street Journal reported Walmart (NYSE:WMT) is suing its credit card partner and seeking to terminate the partnership.
The lawsuit, filed by Walmart this week in the Southern District of New York, claims Capital One didn't meet certain terms of the partnership contract.
The retailer believes Capital One did not provide the required and contracted customer service, for example, by not replacing lost cards promptly and not swiftly posting some transactions and payments to cardholders' accounts.
The WSJ said a Capital One spokesman told them the "immaterial servicing issues were cured by Capital One pursuant to the terms of the agreement," and the lawsuit is Walmart making an attempt to renegotiate the economic terms or end the deal early.
WSJ revealed its sources told them Walmart executives recently told Capital One they wanted to renegotiate some terms of the deal, which runs until 2026, such as adjusting the loss-sharing agreement. However, Capital One reportedly did not accept the demands.
A Walmart spokesperson told the WSJ that the company decided to end its consumer credit card agreement with Capital One, citing Capital One's failure to meet several contractual obligations.