By Ken Sweet ,AP
NEW YORK — American Express plans to trim US$1 billion in expenses over the next two years as it deals with the impact of the strong U.S. dollar and fierce competition for its cardholders.
Its fourth-quarter profit declined 38 percent from a year ago, and its shares dropped 4 percent in after-hours trading.
The New York company has had an unusually dramatic year. In February 2015, warehouse chain Costco said it would end its 16-year exclusive arrangement with AmEx, changing its credit card acceptance over to Visa and changing its co-branded credit card to Citigroup. Only a few days later, the U.S. District Court Judge ruled against American Express in a closely watched antitrust lawsuit.
The ongoing strength of the U.S. dollar makes any revenue earned abroad worth less when brought back into the U.S.
To add to the difficulties, American Express President Edward Gilligan died suddenly while on an airplane. He was largely thought as a potential successor to the company’s long-serving current CEO, Kenneth Chenault.
Given the upheaval, the strong U.S. dollar and that “revenue growth has not accelerated as we anticipated,” the company is “moving aggressively to streamline,” Chenault said.
In a conference call with investors, AmEx Chief Financial Officer Jeffrey Campbell said the company would be looking at cutting costs across the entire business, including total operating expenses, marketing expenses and promotions. Layoffs were not specifically mentioned, but AmEx executives said the cost cutting would be “aggressive.”
Overall, American Express said it earned a profit of US$899 million, or 89 cents per share, compared with a profit of US$1.44 billion, or US$1.39 a share, in the same period a year earlier.