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Alliance Renews Deal with Gander

Zacks Equity Research

The Retail Service business of Alliance Data Systems Corporation (ADS) inked a long-term renewal agreement with Gander Mountain to continue with the co-brand credit card program service.

Headquartered in St. Paul, MN, Gander Mountain Company offers fishing, hunting, camping, marine and outdoor lifestyle and active performance products. It operates119 stores in 24 states besides an e-commerce site and Overton's catalog brand.

As per the agreement, under Alliance Data’s co-branded credit card program service, the customers of Gander Mountain will continue to receive free-merchandise rewards depending on their transaction amount. Under the program, customers can also enjoy flexible financing options. Moreover, the Gander Mountain credit card will be customized so that customers can have their preferred pictures on the cards.

While this is the first long-term agreement in 2013 under Alliance’s Private Label Services and Credit segment, the company has signed a few agreements under its LoyaltyOne segment.

The Private Label Services and Credit segment has continuously delivered solid numbers. We believe that cracking new deals along with the renewal of the existing ones will further enhance its performance. The segment’s revenue in the fourth quarter of 2012 improved 23% year over year, while operating income surged 21%.

Alliance Data expects core earnings per share to be at $9.65, up 12% year over year.The Zacks Consensus Estimate for 2013 is currently pegged at $9.33, shy of the company’s guidance. It also represents a year-over-year improvement of 13.9%.

Alliance Data currently carries a Zacks Rank #3 (Hold). Among other financial transaction service providers, Vantiv, Inc. (VNTV) carrying Zacks Rank #1 (Strong Buy) and Fiserv, Inc. (FISV) and Global Payments Inc. (GPN) both carrying a Zacks Rank #2 (Buy) are worth noting.

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