Author Topic: ADS - Alliance Data Systems  (Read 71340 times)

abitofvalue

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Re: ADS - Alliance Data Systems
« Reply #380 on: August 23, 2019, 06:55:33 AM »

I wonder if they’ve been overly aggressive in what they offer these new brands to offset the declining brands.  This from a Floor and Decor investor conference about a year ago certainly sounds like that may be the case:

Our credit sales, since I've been here, have grown at a much faster rate than our overall sales. We had a great partner. We actually just recently changed partners in May. That's been a huge benefit for us. The cost is about 1/4 of what we were paying before, so there's a slightly lower tender cost, and they're a really good marketing company. We switched to a company called Alliance Data Systems, or ADS, and they've been a great partner with us so far. So on the consumer side, we've had great success, and we think we've selected a partner now that's going to make us even better. And we've seen early signs of our average ticket, average credit line approvals, average spend, and again, it's only been a couple of months now, but we've seen those all tick up nicely relative to how it was going with our previous partner.

Not sure what you really mean - typically when ADS signs a new retailer, they offer them a full marketing package as part of the deal which is likely the source of cost savings that they're talking about. That, or Floor & Decor could have had a cobranded card program before ADS which is typically much more expensive due to the network fees.

I'm not really sure what you mean when you say you wonder if they're being overly aggressive in what they're offering?

Well I recall one of Walmarts issues with Synchrony was that they weren’t approving enough cards and not issuing enough credit.  The retailer obviously wants very loose credit policies since they get paid for store purchases up front and the credit risk is on the credit provider.  So I view it as a potential red flag when your new credit provider sees a big tick up in their average credit line approvals.  Could be an indication that they are lending more than another informed party thought was prudent.

yup.  Think Children's Place also has made comments about how ADS pays them a higher amount.  ADS also makes analyzing credit challenging by not following industry standard disclosure on the credit side (no FICO breakdown as an example). Maybe the leadership switch will prompt better disclosure too.

One thing i notice is more of ADS' new deals are co-brand deals. IIRC, they used to have a 100% private label portfolio but some of the newer deals are true co-brands. Does anyone know if they have the same dual-card features as SYF? If not, why? 


frank87

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Re: ADS - Alliance Data Systems
« Reply #381 on: August 23, 2019, 06:59:58 AM »

I wonder if they’ve been overly aggressive in what they offer these new brands to offset the declining brands.  This from a Floor and Decor investor conference about a year ago certainly sounds like that may be the case:

Our credit sales, since I've been here, have grown at a much faster rate than our overall sales. We had a great partner. We actually just recently changed partners in May. That's been a huge benefit for us. The cost is about 1/4 of what we were paying before, so there's a slightly lower tender cost, and they're a really good marketing company. We switched to a company called Alliance Data Systems, or ADS, and they've been a great partner with us so far. So on the consumer side, we've had great success, and we think we've selected a partner now that's going to make us even better. And we've seen early signs of our average ticket, average credit line approvals, average spend, and again, it's only been a couple of months now, but we've seen those all tick up nicely relative to how it was going with our previous partner.

Not sure what you really mean - typically when ADS signs a new retailer, they offer them a full marketing package as part of the deal which is likely the source of cost savings that they're talking about. That, or Floor & Decor could have had a cobranded card program before ADS which is typically much more expensive due to the network fees.

I'm not really sure what you mean when you say you wonder if they're being overly aggressive in what they're offering?

Well I recall one of Walmarts issues with Synchrony was that they weren’t approving enough cards and not issuing enough credit.  The retailer obviously wants very loose credit policies since they get paid for store purchases up front and the credit risk is on the credit provider.  So I view it as a potential red flag when your new credit provider sees a big tick up in their average credit line approvals.  Could be an indication that they are lending more than another informed party thought was prudent.

Pretty much all the private label card companies approve nearly all who apply. They manage credit risk by limiting card balances.

vince

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Re: ADS - Alliance Data Systems
« Reply #382 on: August 24, 2019, 01:59:05 PM »
but have been doing a decent job signing new brands that have higher and more robust growth profiles - Houzz, Sephora, Burlington, Carter's, etc have all been signed in the last 6 months or so and will spin up over the next few years.

I wonder if they’ve been overly aggressive in what they offer these new brands to offset the declining brands.  This from a Floor and Decor investor conference about a year ago certainly sounds like that may be the case:

Our credit sales, since I've been here, have grown at a much faster rate than our overall sales. We had a great partner. We actually just recently changed partners in May. That's been a huge benefit for us. The cost is about 1/4 of what we were paying before, so there's a slightly lower tender cost, and they're a really good marketing company. We switched to a company called Alliance Data Systems, or ADS, and they've been a great partner with us so far. So on the consumer side, we've had great success, and we think we've selected a partner now that's going to make us even better. And we've seen early signs of our average ticket, average credit line approvals, average spend, and again, it's only been a couple of months now, but we've seen those all tick up nicely relative to how it was going with our previous partner.

I can see your concern here but I actually like this disclosure.  What could be better than having a recent signing publicly disclose that there is an IMMEDIATE improvement to their sales and attribute that to ADS.  I think everyone knows that these signings boost sales for the retailer but getting those incrementally positive results from a retailer that previously had a similar relationship with another entity is a much stronger indicator of the quality of ADS's services.