American Express posted first-quarter earnings and sales that beat analysts’ expectations as it continues to regroup from the loss of its partnership with warehouse chain Costco.
The company’s profit fell to $1.24 billion, or $1.34 per share, from $1.43 billion, or $1.45 per share, in the same period a year earlier. Sales reached $7.9 billion, down 2% from $8.1 billion a year ago.
Analysts polled by FactSet had expected earnings of $1.28 a share on sales of $7.8 billion.
“Our first-quarter performance marks a good start to the year with momentum in the consumer and commercial businesses in the U.S. and in key markets internationally,” American Express CEO Kenneth I. Chenault said in a news release. “The results reflect many of the investments we’ve been making to grow the business, plus continued progress in reducing operating expenses.”
The co-branded credit card relationship between American Express and Costco ended in June. As The Associated Press reports, Costco “represented a sizeable portion of American Express’ credit card loans and its billed business. To recover, AmEx has been more aggressively marketing its products, as well as making changes to products like the Platinum Card to entice more customers.”
Excluding last year’s Costco-related business and the impact of foreign exchange rates, adjusted revenues net of interest expense grew 7% in the first quarter, up from a year-over-year increase of 6% percent in the prior quarter.
“Those increases primarily reflected higher adjusted card member spending and adjusted net interest income,” AmEx said.
Card member spending, a key metric for how often American Express customers are using and spending on their card, rose 14 % in the first quarter from a year earlier. According to The Financial Times, consumer confidence has “perked up since the first quarter of last year, particularly among wealthier individuals who have benefited from higher asset prices.”
“Federal Reserve rate increases were also a boon to interest income,” the FT added.