Zacks_Analysts' Blog : Alliance & Pier 1 Imports Ink Deal - Analyst Blog

Alliance Data Systems Corporation (ADS) has inked a long-term private-label credit card agreement with Pier 1 Imports (PIR).

Per the agreement, the banking arm of Alliance Data will offer private-label credit card services, from account acquisition to marketing and customer service to Pier 1 Imports.

Alliance Data expects this program portfolio to be in the $120 million range by the end of next year.

The present private-label credit card program of Pier 1 Import will stay in place till portfolio conversion takes place in the first quarter of 2012.

In the second quarter of 2011, the Private Label Services and Credit segment posted a lower single digit year-over-year growth in revenue. We expect this transaction will help the company to generate additional revenue and help the segment to deliver higher growth going forward.

During, the earnings conference call, Alliance Data guided towards high double-digit growth in revenues and core earnings of $1.85 per share for third quarter of 2011. The Zacks Consensus Estimate for third-quarter 2011 is $1.76 per share.

The company raised the adjusted earnings expectation to $7.20 per share from $7.00, the previous guidance and a 23% year-over-year increase. The Zacks Consensus Estimate for 2011 is $6.73 per share.

The quantitative Zacks #3 Rank (short-term Hold rating) for Alliance Data indicates no clear directional pressure on the stock over the near term.

Headquartered in Fort Worth, Texas, Pier 1 Imports is an importer and specialty retailer of imported decorative home furnishings and gifts in the United States, Canada, and Mexico.

Headquartered in Dallas, Texas, Alliance Data Systems Corporation, together with its subsidiaries, provides data-driven and transaction-based marketing and customer loyalty solutions primarily in the United States and Canada. It competes with Discover Financial Services (DFS).