Back to top

Analyst Blog

The Canadian Loyalty business of Alliance Data Systems Corporation (ADS - Analyst Report) inked a multi-year agreement with Sobeys, whereby the latter will issue AIR MILES at all Sobeys stores. Shares have gained over the last 2 days as the cross-Canada agreement for reward miles is the second such that the company has entered into in the ongoing quarter.

Sobeys, a wholly owned subsidiary of Empire Company Limited, owns or franchises more than 1,500 stores under several retail banners in all the 10 Canadian provinces. It boasts over a hundred years of service in the Canadian grocery industry.

Per the agreement, Sobeys-owned brands in Atlantic Canada, Quebec, Western Canada and northwestern Ontario will be part of the AIR MILES Reward Program.  The new agreement replaces all previous deals with Sobeys and places it in the top-10 client list of Alliance Data. The ongoing loyalty programs will move to AIR MILES Reward Program in the fall of 2014.

AIR MILES Reward Program will be introduced this fall at Sobeys, IGA, Thrifty Foods and Sobeys Liquor stores in British Columbia, Alberta, Saskatchewan and Manitoba, respectively. In addition, Sobeys will continue the partnership in Safeway and Safeway Wine and Spirits stores across the west and locations in Northwestern Ontario.

Subsequently, AIR MILES can be redeemed with more than 1,200 different rewards, including travel, movie passes, entertainment attractions and electronic merchandise.  In addition, collectors can also redeem their points for AIR MILES Cash at selected Sobeys banner stores that had issued the reward miles. Hence, with this tie-up, Sobeys will be able to better serve its customers.

With more than 65% of the Canadian household collecting reward miles, the AIR MILES Reward Program has positioned itself as Canada's premier coalition loyalty program with more than 10 million active collectors under it. The number is expected to ramp up as more brands affiliate to the program.

In May, the Canadian Loyalty business of Alliance Data inked a multi-year agreement with Moneris Solutions Corporation, Canada's largest credit and debit card processor.

In the last reported quarter, AIR MILES’ reward miles at Alliance Data decreased 4% year over year. We expect that such deals will help Alliance Data bounce back to the growth trajectory.

Alliance Data currently carries a Zacks Rank #2 (Buy). Among other financial transaction service providers, Fidelity National Information Services, Inc. (FIS - Analyst Report) and VeriFone Systems, Inc.  (PAY - Analyst Report) carrying a Zacks Rank #1 (Strong Buy); and Total System Services, Inc. (TSS - Analyst Report) with a Zacks Rank #2 are worth noting.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIM'S P… PPC 31.52 +3.72%
CLAYTON WIL… CWEI 138.97 +3.55%
FLAMEL TECH… FLML 14.02 +3.16%
CALLON PETE… CPE 11.50 +3.14%