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Share Name Share Symbol Market Type
American Express Company NYSE:AXP NYSE Common Stock
  Price Change % Change Share Price High Price Low Price Open Price Shares Traded Last Trade
  -1.68 -1.06% 157.00 105 10:15:45

American Express Sees Higher Consumer Retail Spending -- Update

23/10/2020 2:43pm

Dow Jones News


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By Allison Prang 

American Express Co. said consumer retail spending improved in the third quarter, but spending on travel and entertainment remained substantially lower.

Non-travel and entertainment spending -- which made up about 70% of spending going into the pandemic -- increased about 1% in the third quarter from a year earlier, Chief Financial Officer Jeffrey Campbell said in an interview Friday. He said that climb was partly because of sizable online transactions growth.

"We really look at the fact that non [travel and entertainment] spending is up year over year as illustrative of the way consumers and small businesses have just learned to adapt to the new world," he said.

While non-travel and non-entertainment spending showed some growth in the quarter, it hasn't totally normalized.

"What you would expect on the non-travel stuff is to see growth on an annual basis about 7 or 8%," Mr. Campbell said. "It's not resuming the levels of growth it was at."

Travel and entertainment spending fell 69% from a year earlier. While Mr. Campbell noted the category was substantially lower, he said "consumers show a little bit more life than businesses."

"Clearly travel and entertainment spending is going to take longer to come back," he said. "That's still down much more significantly and is going to take some more significant change in the medical situation to get people completely comfortable."

The credit-card company said revenue net of interest expense was $8.8 billion. Analysts had been expecting $8.66 billion. Revenue net of interest expense fell 20% from a year earlier, American Express said, attributing the drop to less card-member spending and a decline in the average discount rate.

Earnings for the quarter decreased to $1.1 billion, or $1.30 a share, the company reported Friday. That was lower than the comparable quarter a year earlier when profit was $1.8 billion, or $2.08 a share. According to FactSet, analysts had been expecting $1.34 a share.

Shares fell 3.5% in premarket trading.

American Express's provision for credit losses was $665 million, the company said. That declined from a year earlier when it was $879 million.

"We've tried to be mindful of the possibility of a further downturn but our baseline assumption is still things steadily get better," Mr. Campbell said.

Write to Allison Prang at allison.prang@wsj.com<mailto:allison.prang@wsj.com

 

(END) Dow Jones Newswires

October 23, 2020 09:28 ET (13:28 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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