American Express Co. (NYSE:AXP) is offering more premium rewards to retain and attract credit card customers.
The company said Friday that it spent a record $2.52 billion U.S. on rewards for customers in the fourth quarter, when it revamped its Gold credit card to include more travel and dining benefits and opened new locations for its Centurion airport lounges.
AmEx Chief Executive Officer Steve Squeri said the record investment was made in an effort to fend off rising competition from other premium credit card companies that have also been increasing their customer rewards.
"Look, the competition, I don’t think it’s going to slow down," said CEO Squeri in a conference call with investors. "We just need to be constantly prepared for it to ratchet up at any moment."
AmEx has been spending more to improve offerings for premium and small-business cardholders as competition rises. Expenses during the quarter rose 9% to $7.7 billion U.S., above the $7.57-billion U.S. average of 13 analyst estimates compiled by Bloomberg.
The company’s efforts to entice customers to spend more on their cards may not be working as well as analysts hoped: Spending on the firm’s products rose 6% to $309 billion U.S., AmEx said in a statement announcing fourth-quarter results.
AmEx`s share price slid 3.5% to $96.00 U.S. late Thursday in New York trading Friday. It has climbed 4.4% this year, compared with the 7.2% advance of the 68-company S&P 500 Financials Index.
AmEx said it expects profit of $7.85 U.S. to $8.35 U.S. a share for 2019, compared with the $8.13 U.S. average of 29 analyst estimates compiled by Bloomberg. The firm also expects revenue growth of 8% to 10% for the year.
