WU Renews Pact With Safeway

Leading money transfer company, Western Union Co. ( WU - Analyst Report ) , has renewed its agreement with Safeway Inc. ( SWY - Analyst Report ) , one of the largest food and drug retailers in North America.

Per the renewed contract which has a span of five years, the money transfer company will continue to provide its Western Union global money transfer services to the latter. In addition to this, Safeway will also use Western Union money order and consumer bill payment services in the U.S. from this year.

Western Union holds a solid reputation in the money transfer market and has a wide global network of more than 5,000 agents. Partnering with the company will enable Safeway to enhance service to its customers.

Western Union is a leader in a growing market with a strong global brand, a large and growing agent network, a global organization with best payment capabilities and local market expertise.

Of late the company has faced regulatory issues in Mexico and Latin America. It has also been facing declining pricing for remittance service in some international markets, with related loss of market share.

Nevertheless, in order to maintain growth amidst competitive market conditions, Western Union has taken a series of strategic growth steps. These include improved customer value proposition, digital channel growth and implementing productivity and cost saving initiatives.

Western Union is scheduled to report fourth quarter and full year earnings on Feb, 12, 2013. The Zacks Consensus Estimates earnings of 35 cents per share compared to 40 cents per share reported in the year ago quarter.

Western Union currently retains a Zacks Rank #3 (Hold). We are also maintaining our long-term Neutral recommendation on its shares. Peer Moneygram International Inc. ( MGI - Analyst Report ) , also currently retains a Zacks Rank #3 (Hold).