The Retail Service business of Alliance Data Systems Corporation (ADS) recently signed a long-term agreement with Venus to provide private-label credit card services to the latter. Following the news, shares moved up 0.6% to close at $274.23 on Friday’s close.
Jacksonville, FL-based Venus is a leading women's fashion online and catalog retailer. Venus already has a long-standing relationship with Alliance Data’s Epsilon business, whose database provides customer prospecting and marketing services to Venus.
Per the agreement, Alliance Data will design marketing-driven credit card program services that will reward Venus’ customers based on their transaction amount. While these programs add value for customers, the company benefits to gain from customer loyalty and higher spending.
Customers can earn points on spending, receive reward certificates for future redemptions, and enjoy easy exchanges and special offers. Venus benefits through incremental sales, cross-category selling and increased transaction size. This in turn, will ramp up the growth profile of Venus that is already delivering double-digit growth.
At present, the Retail Service business at Alliance Data manages more than 130 private label and co-brand credit programs. Earlier in February, this business inked a long-term renewal agreement to continue providing both private-label and co-brand credit card services for customers of lifestyle and entertainment retailer HSN.
In the last reported quarter, Private Label generated 13% revenue growth and 14% increase in average card receivables at Alliance Data. Continued inking and renewal of long-term agreements should help the company deliver robust numbers going forward.
Alliance Data currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the business service sector are JTH Holding, Inc. (TAX), Rentrak Corp. (RENT) and SouFun Holdings Ltd. (SFUN). All these stocks sport a Zacks Rank #1 (Strong Buy).
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