American Express CEO Kenneth Chenault to Step Down -- 3rd Update
October 18 2017 - 5:47PM
Dow Jones News
By AnnaMaria Andriotis
Kenneth Chenault, the head of American Express Co. and one of
the country's most prominent African-American corporate leaders,
will step down as chairman and chief executive Feb. 1, capping a
16-year run at the iconic card company as it grapples with a new
wave of competition.
The 66-year-old executive will be succeeded as CEO by Stephen
Squeri, a three-decade AmEx veteran who previously ran its division
in charge of corporate cards. As vice chairman since 2015, Mr.
Squeri, 58, had spent more time meeting with shareholders, leading
many to believe he was on the shortlist to be the next chief
executive.
Shares added 0.4% to $92.45 in after-hours trading as the
company also reported stronger-than-expected earnings and revenue
for the third quarter and raised its profit guidance for the
year.
Mr. Chenault's departure comes after a tumultuous period in
which he fought to revive AmEx's fortunes following the loss of a
key partnership with Costco Wholesale Corp. and as the company's
pre-eminent product, the Platinum card, came under attack from J.P.
Morgan Chase & Co.'s Sapphire Reserve card.
Mr. Chenault had a stellar run for most of his time atop the New
York-based company. But AmEx's recent travails have cast a shadow
over his tenure -- something he fought to escape before stepping
aside.
Despite a booming credit-card market that recently surpassed $1
trillion in balances, AmEx has ceded market share and some
shareholders have questioned where long-term growth will come from.
Many senior executives have left the company, and Mr. Chenault
suffered a personal loss with the unexpected death in 2015 of his
would-be successor, AmEx President Ed Gilligan.
The company's main focus in recent years has been ramping up
lending to consumers and small businesses while also searching for
new ways to appear to millennials, many of whom crave different
kinds of rewards and are more comfortable moving money with their
phones than a credit card.
Mr. Chenault's departure comes after a recent rebound in the
AmEx stock, as the company addressed some of shareholders' biggest
concerns. In the past year, shares have rallied more than 50%,
compared with a 28% rise in the Dow Jones Industrial Average. In
recent months, the company has notched a few victories, and
shareholders say Mr. Chenault has appeared more upbeat and
confident in his meetings with them.
In early June, the company said it won the rights to become the
exclusive issuer of the Hilton Worldwide Holdings Inc. credit cards
starting in 2018, beating out Citigroup Inc.
Few would argue that the credit-card market has changed
dramatically since Mr. Chenault took over in 2001. Two of the most
significant changes: increasing competition from banks and more
emphasis on rewards for consumers.
AmEx has traditionally focused on card holders who pay their
bills in full each month, but that means the company doesn't
typically generate the interest revenue needed to offer as much in
points and other quantifiable rewards that some big banks have been
doling out.
Meanwhile, for the third quarter, the company reported a profit
of $1.36 billion, or $1.50 a share, up from $1.14 billion, or $1.20
a share, a year earlier. Revenue, net of interest expense, rose
8.5% to $8.44 billion. Analysts surveyed by Thomson Reuters had
projected $1.47 a share in earnings on $8.29 billion in
revenue.
American Express now expects to make $5.80 to $5.90 a share for
the year, up from its earlier view of $5.60 to $5.80 a share.
AmEx again increased the money set aside for possible losses to
$769 million, up 53% from the year-ago period, which it attributed
to continued growth in its loan portfolio and an expected increase
in lending write-off and delinquency rates.
Expenses rose 5.5% to $5.84 billion with card members rewards
and card member spending accounting for the bulk of the
increase.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
October 18, 2017 17:32 ET (21:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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