Helped by a 10% increase in credit card sales from a year earlier as consumer spending accelerated, Alliance Data Systems Corp. on Oct. 20 reported significant increases in third-quarter revenue and income.
Net income for the quarter ended Sept. 30 was $94 million, up 77.4% from $53 million during the same period last year. Revenue was up 20.3%, to $844.8 million from $702.4 million.
The Dallas-based company’s Private Label Services and Credit unit generated $389.1 million in revenue, up 11.3% from $349.6 million a year earlier. Credit card sales were up 10.2%, to $2.26 billion from $2.05 billion.
“Year over year, there was solid improvement in most areas of the retail world, with specialty retailers showing the largest gains,” Charles Horn, Alliance Data chief operating officer, told analysts during an Oct. 20 conference call to discuss earnings.
Average receivables for the quarter were $4.86 billion, down 1% from $4.91 billion because of a 100 basis point increase in the customer payment rate to 18% and the run-off of terminated credit card programs, Alliance Data noted in its earnings news release. However, average credit card receivables should increase approximately 2% during the fourth quarter and by the high single digits next year, excluding any new credit card programs or portfolio acquisitions that may be signed during 2012, the company said.
The credit card delinquency rate improved to 4.9% of principal receivables on Sept. 30, down 120 basis points from 6.1% a year earlier. The principal charge-off rate was 6%, representing a 230 basis point improvement from a year earlier, Horn said.
During the quarter, Alliance Data signed a long-term renewal agreement to continue providing private-label credit card services for The RoomPlace and also signed a new long-term agreement to provide private-label and cobranded credit card services for Marathon Petroleum Corp.
Concurrently, the company entered into a purchase and sale agreement to acquire the existing private-label portfolio of Marathon, with closing expected in the fourth quarter, according to the earnings release. Most recently, Alliance Data signed a new agreement to provide private-label services for Pier 1 Imports and to acquire the existing card portfolio, with closing expected in the first quarter of 2012 (
Air Miles reward miles issued during the quarter totaled 1.22 billion, up 8.9% from 1.12 billion, while miles redeemed totaled 869.8 million, up 3% from 844.5 million, according to the earnings release.
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