Citing growth from new clients and improving charge-off trends, Alliance Data Systems Corp. on Oct. 20 announced dramatic increases in third-quarter revenue and profitability for its private-label credit card unit.
The unit generated operating income of $133.3 million for quarter ended Sept. 30, up 121% from $60.3 million a year earlier. Revenue increased 16.6%, to $350 million from $300 million.
During a conference call Oct. 20 to discuss the earnings, company officials noted that a multiyear agreement signed to provide private-label credit card and marketing services to the nationwide retail chain David’s Bridal Inc. helped to expand operations during the quarter (see story). http://www.paymentssource.com/news/davids-bridal-chooses-alliance-data-for-private-label-card-program-3003080-1.html
Some retail partners canceled their private-label card programs this year because of poor performance or bankruptcy, but private-label card consumers in general have not pulled back dramatically on spending, Alliance Data CEO Ed Heffernan told analysts during the call.
“There has been a lot of discussion about how bankcards have had their files shrink dramatically, ... (but) we are seeing our average balance per card member (increase). … If we flow that along with the ramp-up of new accounts, we are probably around about an 8% growth rate year-over-year.”
Credit card purchase volume rose 5.3%, to $2 billion from $1.9 billion during last year’s third quarter, while average receivables grew 16.7%, to $4.9 billion from $4.2 billion. The company serviced 34.8 million accounts during the quarter, up 11.9% from 31.1 million a year earlier.
Charge-offs on outstanding receivables were 8.3%, down 110 basis points from 9.4% a year ago. Delinquency rates essentially were flat at 6.1%.
The company’s provision for loan losses during the quarter was $90 million, down 10% from $100 million a year ago.
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