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Dec 31, 2020
Bread Financial Q4 2020 Earnings Report
Alliance Data's Q4 2020 results reflected resilience in a challenging environment, marked by strategic initiatives and sequential improvement following pandemic impacts.
Key Takeaways
Alliance Data's Q4 2020 financial results reflected a continued gradual recovery in Card Services credit sales. Success in the beauty and health & wellness verticals contributed to the 24% sequential increase in total credit sales in the seasonally strong holiday period. Credit metrics remained resilient and delinquency rates improved as a result of enhanced collection efforts, prudent credit line management, the expansion of consumer relief programs in 2020, and stimulus payments.
Alliance Data's 2020 operating performance demonstrated resilience in a very challenging business environment.
Strategic investments in innovation and additional capabilities improved competitive positioning and enhanced cardmember experience.
Bread's growth trajectory continues to accelerate with the onboarding of digital partners.
Alliance Data added talent in key areas of Card Services businesses, including business development, product, data & analytics, and digital innovation.
Bread Financial
Bread Financial
Forward Guidance
In 2021, Alliance Data expects credit sales to increase by high-single digits, with a net loss rate of approximately 6% in the first quarter of 2021, in line with a gradual economic recovery. Total revenue is anticipated to be down low-single digits compared to 2020.
Positive Outlook
- Credit sales are expected to increase by high-single digits in 2021.
- Net loss rate is expected to be approximately 6% in the first quarter of 2021.
- Credit card and loan receivables at year-end 2021 are projected to be in line with year-end 2020 levels.
- High single-digit to low double-digit card receivables growth is expected as we exit 2021.
- Expenses are expected to remain flat while we continue to fund initiatives to better position the Company for future growth.
Challenges Ahead
- Average normalized receivables are expected to be down mid- to high-single digits for the year.
- Total revenue is anticipated to be down low-single digits compared to 2020.
- Pressure in the first half of 2021.
- Impact from lower receivables.
- Balancing growth and profitability to ensure the sustainable economics of our portfolio.