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Alliance Data-Blue Nile Ink Deal

Zacks Equity Research

Alliance Data Systems Corporation (ADS) inked a long-term agreement with Blue Nile (NILE) in order to initiate and control a new private label credit card program for the latter. Seattle-based Blue Nile is the leading online retailer of diamonds and fine jewelry.

The card program will encompass customized financing options and online account management without charging any annual card fee. The program enables customers to choose from financial options including 6 and 12 months which would ultimately be equivalent to the cash payment that the customers had to pay. On the other hand, customers have the ease to make payments over a period of 24 or 48 months.

Alliance Data will also partner Blue Nile in bringing added incentives for cardholders and marketing initiatives through advanced analytics capabilities, direct mail and email, web and mobile channels.

In the first quarter of 2012, the Private Label Services and Credit segment revenue registered a 7% growth. We expect this transaction to help the company generate additional revenue as well as help the segment to continue delivering robust growth going forward.

Alliance Data posted strong first quarter results with operating earnings substantially ahead of the Zacks Consensus Estimate and year-ago earnings. The strong results came on the back of solid performances across all segments.

The quantitative Zacks #2 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

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).

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