American Express Sees Higher Consumer Retail Spending -- Update
October 23 2020 - 9:43AM
Dow Jones News
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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