Alliance Data Systems has better 2012 than expected; full-service business model works, says CEO

By Lisa Kerner

Charlotte, N.C., Feb. 11 - Alliance Data Systems Corp. president and chief executive officer Ed Heffernan said 2012 was "an exceptionally good year" for the company, which finished "a bit stronger" than anticipated.

Heffernan made his comments during a presentation on Monday at the Keefe, Bruyette, & Woods Cards, Payments & Financial Technology Symposium in New York.

Alliance Data revenue was up 15% from the prior year at $3.64 billion, according to presentation materials.

The company reported cash of about $894 million at year-end, up from about $216 million at the end of 2011.

Debt was about $2.85 billion at Dec. 31, versus about $2.18 for the prior year, according to the company's earnings news release.

Business model works

Heffernan said Alliance Data is sticking to the "one-throat-to-choke" approach to business it developed in the 1990s.

"We are one-stop shopping for our clients," said Heffernan.

He explained that customers must agree to sign on for all components of the services offered in any of the three business segments: LoyaltyOne, Epsilon, or Private Label Services and Credit. For example, Private Label customers can't opt out of the marketing component of the service or keep the high-end customer care service in-house.

"For us, it's all done by us," Heffernan said.

According to the CEO, this approach is "not for everyone," and the company has lost many potential customers as a result.

However, Heffernan said that in his 14 years with the company, there has been "zero attrition."

Alliance Data Systems is a Dallas-based provider of marketing and loyalty services.

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