DOW JONES NEWSWIRES
Alliance Data Systems Corp. (ADS) posted a 44% decrease in
first-quarter net income as the credit-card processor saw currency
effects drag down revenue and saw results fall at its
frequent-flier programs.
The company had previously been recording strong results from
frequent flier and loyalty programs, as consumers have boosted the
company's results by increasingly turning to programs that give
back for spending as they look to trim their budgets. But that
trend didn't hold up this quarter.
Net income fell to $27.9 million, or 45 cents a share, compared
with $49.3 million, or 61 cents a share, a year earlier.
Excluding stock-based compensation and other one-time items,
cash earnings were $1.19 a share, compared with the $1 a share it
earned a year earlier and the $1.10 a share it had been expecting
to earn.
Revenue slipped 4% to $480 million, below the $488 million
analysts polled by Thomson Reuters had been expecting. Excluding
currency exchanges, revenue would have increased 4%.
In its loyalty-services segment - which operates frequent-flier
programs and gasoline credit cards - adjusted earnings before
interest, taxes, depreciation and amortization rose 34%, though
revenue fell 7% as foreign currency exchanges hurt the results.
The Epsilon segment - which provides loyalty programs for a
range of companies including Barnes & Noble Inc. (BKS) and
Pfizer Inc. (PFE) - posted a 6% decrease in adjusted earnings on a
2% rise in revenue as the company said the year-ago results were
strong and the latest quarter "tracked" expectations.
For the private-label credit segment, revenue slumped 11% and
earnings tumbled 34%, while its smaller private-label services unit
saw revenue rise 4% and earnings rise 11%.
For the second quarter, the company said it is expecting cash
earnings of about $1.05 a share, below the $1.22 analysts had been
projecting. And Alliance Data said it is maintaing its full-year
guidance of earnings of "at least" $5.15 a share, though it had
previously called for a range of $5.15 to $5.20.
Alliance Data shares have somewhat recovered from last year's
steep fall, now down 22% over the past 12 months after nearly
doubling in the past month. Much of the gains have come just as the
company put in place a new chief executive, Edward Heffernan, who
took over March 1 when J. Michael Parks moved to the sole role of
chairman.
-By David Benoit, Dow Jones Newswires; 201-938-2472;
david.benoit@dowjones.com