The Retail Service business of
Alliance Data Systems Corporation
) inked a long-term deal with The Talbots, Inc., in order to offer
private label credit services to the latter.
Talbots is a leading specialty retailer and direct marketer of
women's apparel, shoes and accessories operating through 516 stores
in 46 states and Canada. It is a wholly owned subsidiary of
Sycamore Partners' TLB Holdings, LLC.
Per the agreement, Alliance Data will acquire Talbots' present
credit card accounts and will also handle private label credit card
program. As such, the company purchased receivables worth $145
million, having moderate delinquency. Alliance Data expects to
continue posting stable results.
Alliance Data will also offer loyalty-related incentives, including
a point-per-dollar reward and additional incentive program.
Recently in late August, Alliance Data penned a long-term renewal
deal with Samuels Jewelers Inc. The agreement entails it to
continue supervising the private label credit card program for the
latter. Samuels Jewelers is a leading retailer of diamonds and fine
The Private Label Services and Credit segment has continuously
delivered solid numbers. We believe cracking new deals along with
the renewal of existing ones will further bolster its performance.
The segment's revenue in the second quarter improved 15% year over
year while operating income surged 30%.
The Zacks Consensus Estimate for 2012 is currently pegged at $8.08,
shy of the company's guidance of $8.45. It also represents a
year-over-year improvement of 12%.
Alliance Data holds a Zacks# 3 (short term Hold rating), indicating
no clear directional pressure on the shares over the near term.
Discover Financial Services
), which closely competes with Alliance Data, currently holds a
Zacks # 2 (short term Buy rating) indicating slight upward boost on
the shares over the near term.
ALLIANCE DATA (ADS): Free Stock Analysis Report
DISCOVER FIN SV (DFS): Free Stock Analysis
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