Alliance Data - Talbots Inks Deal - Analyst Blog


The Retail Service business of Alliance Data Systems Corporation ( ADS ) 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 jewelry.

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 ( DFS ), 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 Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ADS , DFS

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