American Express announced preliminary earnings last night ahead of its formal announcement next week along with a restructuring plan to cut 5,400 jobs, mostly in its global travel business as more customers shift their travel bookings to the internet. While the majority of the headlines in the press were related to the job cuts, I was more interested in the earnings results from AMEX.
The main line from the press release detailing the 4th quarter specifically:
Cardmember spending was 8 percent higher than a year ago, despite a brief dip in late October / early November reflecting the impact of Hurricane Sandy on consumers and businesses in the northeastern U.S.
So overall, the Sandy impact was minimal for AXP, which has done a good job growing its overall member base over the past few years. Card write-offs also remain near historically low levels of 2%.
The high-end American consumer clearly remains strong as holiday spending held up well despite the fiscal cliff headlines, though executives were a bit more cautious on the conference call for 2013 spending. The increasing job cut announcements from large American corporates, however, is one sign that U.S. companies are battling to keep their margins near historic highs (as I discussed earlier this week). AMEX revenue was actually a slight miss to top-line growth (and that’s despite a generally good quarter), so the margin story will have particular importance for earnings to start 2013.
- Quiet session, though China saw some selling for the first time this year after higher-than expected CPI data, with the Shanghai index down almost 2%. Japan remained strong, up 1%, as its parliament passed more fiscal stimulus measures.
- Europe has traded close to flat again, a theme all week. The SX5E index is up 0.15%, and SPX futures are flat.
- Commodities moved lower too on the Chinese data, with some concerned that inflation there might lead to interest rate hikes by the Chinese central bank later this year.
- The dollar and Treasuries are close to flat, after the dollar’s whacking yesterday against the Euro on Draghi’s conference call reiterating support for the euro
- WFC reports at 8am EST