Kohl's ( KSS) said Monday that it will sell its credit card accounts to J.P. Morgan Chase ( JPM) for around $1.5 billion and return cash to shareholders through a buyback.

The midpriced department-store chain will continue to handle all customer service, advertising and marketing activities related to its credit card operations. The business has more than 13 million accounts.

Kohl's said the $1.5 billion cash price tag is an estimate; the exact purchase price for the business will be equal to the receivable balances purchased at the closing date, which is expected to be within 90 days.

In anticipation of the deal, Kohl's board authorized the repurchase of $2 billion of its own shares during the next two to three years. The company also increased its earnings guidance for 2006 to a range of $2.74 to $2.87 a share from a previous forecast of $2.72 to $2.85 a share. Wall Street analysts, on average, expect earnings of $2.80 a share, according to Thomson First Call.

"This transaction strengthens our balance sheet and improves our return on assets," said Kohl's. "It converts our receivables to cash while allowing us to continue to service our customers and participate in the ongoing growth and profitability of our credit business. The transaction is expected to generate savings in interest expense in fiscal 2006, therefore increasing both net income and earnings per share."

Kohl's said its share repurchase plans will have no impact on its growth plans. The company expects to open roughly 500 stores over the next five years, with 80 to 85 new stores in 2006, leading to more than 1200 stores by the end of 2010.

Morgan Stanley ( MS) advised Kohl's on the deal.

Shares of Kohl's recently were up $1.51, or 3%, to $50.31.