Both Bloomberg and Business Journals reported on a short serving CEO at Alliance Data, a top private label credit card issuer. After 5 months at the helm, and a shift of headquarters from Dallas to Columbus, CEO Melissa Miller is out, and Citi’s Ralph Andretta is in. Mr. Andretta assumes the position in February, leaving the retail-centric business in rocky times as we hit the winter holiday season.
The timing is ironic, as The American Banker named Synchrony’s CEO, Margaret Keane, the third most powerful woman in finance. First, on Synchrony:
- Synchrony had its most profitable year in 2018, earning $2.8 billion, a 44% jump from 2017.
Now, on Alliance Data:
As Business Journal reports:
- Melisa Miller is leaving Alliance Data Systems Corp. just five months after she was promoted to CEO and the headquarters moved to Columbus from Texas. Citigroup executive Ralph Andretta will replace her in February, she’ll advise an acting CEO until then.
- “The abrupt C-suite shuffle leaves some apprehension, in our view, as prior dialog suggested that Miller was a permanent replacement,” said a research note released Tuesday by David Holt of CFRA Research. “We highly doubt succession plans were expected to occur within a five-month span.”
- The leadership change announced late Monday “comes as somewhat of a surprise,” said a research note from analyst Sanjay Sakhrani of Keefe, Bruyette & Woods Inc.
- After eight years as CEO of its credit card services business based here, Miller was promoted in June to replace retiring CEO Ed Heffernan. The headquarters moved to its new office complex at Easton from Plano, Texas. Tim King, also in Columbus, was promoted to CFO at the same time, and stays in that role.
- Less than a month ago the company cut 300 jobs in its credit card services division, half of them in Central Ohio, following larger but more gradual cuts over the past 18 months. Alliance Data has about 3,000 employees at Easton and three other offices in the region, down from a headcount of 4,400 in 2018.
- The credit card business was profitable and grew significantly under Miller, Sakhrani said, but with the growth came trouble, especially recently as mall-based retailers compete with Amazon.com. While it hasn’t led to more credit default, the charge business isn’t growing, because retailers’ sales aren’t growing.
Then, let’s turn to Bloomberg:
- Alliance Data Chairman Rob Minicucci said the lender had been looking for someone who could fill the newly created role of chief operating officer and eventually be Miller’s successor.
- “As board members came to know Ralph Andretta and understand the breadth and depth of his card business experience, operational leadership strength and financial expertise, it became apparent that Ralph was an exceptional fit for the immediate strategic needs of Alliance Data,” Minicucci said in a statement. “Hence, a decision was made by the full board to appoint Ralph as the company’s new CEO.”
- Miller joined Alliance Data in 2006 and rose to become president of the card-services unit in 2011. She was named CEO in June, two months after the company announced it would sell Epsilon, its $4.4 billion digital marketing business. She’s tried to focus on partnering with more digital retailers and streamline operations to help save $100 million in expenses.
- “While it’s unfortunate that the company has moved a key executive who has run the private label business successfully over her tenure, we are encouraged by the fact that Mr. Andretta has extensive background in the card business at a large, publicly facing institution,” Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, said in a note to clients.
- Replacing Miller weighed on Alliance Data’s shares, which slipped 1% to $103.80 in late trading on Monday. The stock has plummeted 30% this year, the second-worst performance in the 68-company S&P 500 Information Technology Index.
Private Label Credit Cards play a significant role in U.S. consumer credit. Mercator’s 2018 report on the market estimates there are more than 300 million PLCC cards in the U.S., with Alliance Data in a field of top issuing companies such as Capital One, Citi, Synchrony, and TD Bank.
Watch for an update for the market, which Mercator plans to publish before the end of 2019.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group