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Jun 30, 2020
Bread Financial Q2 2020 Earnings Report
Alliance Data's second quarter results were announced, revealing challenges due to the unusual environment, but supported by actions taken in 2019 and at the outset of COVID-19, resulting in better than expected performance.
Key Takeaways
Alliance Data Systems Corporation reported a 27% decrease in consolidated revenue to $979 million compared to the second quarter of 2019. Income from continuing operations decreased 73% to $38 million, and EPS decreased 70% to $0.81. Adjusted EBITDA, net decreased 50% to $156 million. The company is maintaining an elevated reserve for loan loss, exceeding 13% of end of period receivables.
Sales activity improved progressively throughout the second quarter.
Expense reduction programs achieved approximately $50 million in cost savings.
Additional cost savings of more than $100 million are expected in the second half of 2020.
Credit metrics were better than expected.
Bread Financial
Bread Financial
Forward Guidance
Alliance Data expects to remain EBT and cash flow positive in 2020, with sufficient liquidity to manage through a period of anticipated significant stress. The company expects to enter 2021 as a much leaner organization.
Positive Outlook
- Alliance Data is working closely with clients on adjusting in-store and online strategies and marketing plans.
- Home décor and beauty continue to be strong-performing verticals.
- Multi-year Private Label Credit Card (PLCC) renewals were signed, including The Tile Shop.
- A new PLCC commercial card program was launched with Floor & Decor.
- A new multi-channel PLCC agreement was signed with SalonCentric.
Challenges Ahead
- Uncertain business environment.
- Adapting to and supporting the needs of enterprise clients and cardmembers.
- Strengthening financial position.
- Investing strategically to drive future growth.
- Macro-economic trends for the remainder of the year are uncertain.