("=UPDATE:Alliance Data 1Q Net Dn 44% As Loyalty-Svcs Rev
Falls," published Wednesday at 5:24 p.m. EDT, mischaracterized
Alliance Data's rewards program, which offers air miles as a
"frequent-flier" program in the second and eighth paragraphs. The
error was also made in an earlier story,"=DJ Alliance Data 1Q Net
Down 44% As Frequent Flier Programs Fall", published at 4:26 p.m.
EDT. Wednesday. The correct version follows:)
DOW JONES NEWSWIRES
Alliance Data Systems Corp. (ADS) posted a 44% decrease in
first-quarter net income as sliding revenue in its loyalty-services
and private-label credit units outstripped a modest decrease in
overall operating expenses.
The company had previously recorded strong revenue from loyalty
services programs, as consumers increasingly turned to programs
that give back for spending as they look to trim their budgets. But
that trend didn't hold up this quarter.
Still, its earnings excluding items, were better than the
loyalty-program and private-label card operator expected, and the
company predicted continuing strength in its loyalty services
throughout the year.
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 the company and
analysts had been expecting.
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%.
Total operating expenses fell less than 1% to $378.5
million.
In its loyalty-services segment - which operates a rewards
program that offers points that can be redeemed for air miles and
other purchases as well as gasoline credit cards - adjusted
earnings before interest, taxes, depreciation and amortization rose
34%, though revenue fell 7% as foreign- currency exchange hurt the
results. The company said it had an increase in flier miles
redeemed, but miles issued dropped. It added it didn't believe the
economic environment was playing a role in redemption behavior.
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 maintaining 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.
The company said it expects the loyalty-services segment to post
strong results in the future as consumers finally make purchases
they have been deferring, and air miles awarded rebound. It also
said the Epsilon segment still remains on track and private-label
services should show moderate growth.
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.
Shares fell 2.6% in the regular session and were unchanged in
after-hours trading.
-By David Benoit, Dow Jones Newswires; 201-938-2472;
david.benoit@dowjones.com
