Alliance Data Systems 3Q profit jumps 27 percent

DALLAS -- Alliance Data Systems Corp., which manages loyalty and rewards programs for retailers and others, posted a 27 percent increase in third-quarter earnings, led by growth in its private label business.

The Dallas company also raised its expectations for 2012 and released its initial forecast for the new year.

Alliance said Thursday it earned $119.5 million, or $1.84 per share, in the three months that ended Sept. 30. That compares to net income of $94 million, or $1.60 per share, in last year's quarter. Excluding items such as stock compensation expense and tax-related adjustments, Alliance earned $2.37 per share.

Revenue climbed 8 percent to $911.5 million in a performance that topped Wall Street expectations.

Analysts surveyed by FactSet expected, on average, earnings of $2.23 per share on $894.9 million in revenue.

Alliance said revenue from its private label services and credit jumped 17 percent to $456 million in the quarter. An increase in average credit card receivables helped raise net finance charge income by 19 percent. The private label business provides store-branded credit card programs mainly to specialty retailers like Victoria's Secret and J. Crew.

"Private Label continues to crush it with mid-teens growth in both revenue and adjusted (earnings before interest, taxes, depreciation and amortization) driven by robust growth in the credit card portfolio," CEO Ed Heffernan said in a statement.

The company now expects adjusted 2012 earnings of $8.60 per share, compared to its forecast in July for earnings of $8.45 per share. Alliance expects revenue of $3.6 billion, which is up from a previous forecast of $3.5 billion.

For 2013, it expects earnings of $9.50 per share on revenue of $3.9 billion.

Analysts expect, on average, earnings of $8.58 per share on $3.58 billion in revenue for 2012 and income of $9.82 per share on $3.93 billion in revenue for 2013.

Company shares climbed 2.9 percent, or $4.09, to $142.89 in Thursday midday trading while broader trading indexes were mixed.