The card service business of Alliance Data Systems Corporation (ADS - Free Report) inked a long-term agreement with The Children’s Place, Inc. (PLCE - Free Report) to provide private label credit card services to the later. The company has also agreed to purchase the present portfolio of co-brand credit card accounts of The Children’s Place. This transaction is expected to close in the last quarter of 2016.
The Children’s Place is the largest apparel retailer for little ones in North America. The children’s pure-play specialty wear company has a wide business base with 1,064 stores in the United States, Canada and Puerto Rico.
Per the agreement, Alliance Data will prepare a customized credit card program to deliver robust value proposition and support the current multi-tender loyalty program of The Children's Place. The program should also reward card members. These apart, Alliance Data will work toward building stronger brand loyalty and fuel profitability with its marketing capabilities.
Moreover, the company expects the aforesaid credit card service agreement to complement its private-label credit card portfolio.
The card service business continues to deliver robust numbers with revenues increasing 17% year over year in the last reported quarter. Deals like this are expected to help the business gain momentum. Last month, the card services business of Alliance Data inked a long-term deal with Bed Bath & Beyond Inc. (BBBY - Free Report) to develop its co-brand credit card program.
Alliance Data is set to report its second-quarter results on Jul 21. However, our proven model does not conclusively show that Alliance Data will beat on earnings in the second quarter. Though the company’s favorable Zacks Rank #3 (Hold) increases the predictive power of an earnings beat, an Earnings ESP of 0.00% makes surprise prediction difficult.
Stocks to Consider
A better-ranked financial transaction service provider is WEX Inc, (WEX - Free Report) , which sports a Zacks Rank #1 (Strong Buy).
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