(Reuters) - American Express Co (AXP.N) posted a lower-than-expected quarterly profit on Thursday as the credit card issuer boosted spending on marketing and promotion to fend off rising competition.
The company said it now expects full-year 2017 earnings to be between $5.60-$5.80 per share. AmEx had previously expected to achieve at least $5.60 per share in 2017.
“That outlook is built on a set of priorities designed to put us in a strong position for 2018 and the years ahead,” Chief Executive Kenneth Chenault said.
AmEx’s stock has rallied since the U.S. election as investors hope Trump will usher in a new era of looser bank regulations along with economic growth which should drive increased spending among AmEx customers.
The company’s shares were down about 1 percent in after-hours trading.
Chief Financial Officer Jeffrey Campbell, on a call with analysts, cautioned that quarterly earnings and revenue would be uneven in 2017, with lower growth in the first quarter.
During the quarter, AmEx added 1.6 million cards across its U.S. issuing businesses and 2.4 million on a worldwide basis, Campbell said.
“...we have now effectively replaced Costco as a distribution channel with our own proprietary activities,” Campbell added.
AmEx, which has long catered to affluent customers, has struggled since the loss of a lucrative partnership with Costco Wholesale Corp (COST.O). The portfolio accounted for about 8 percent of the spending on AmEx cards in 2015.
Net income attributable to common shareholders fell to $825 million, or 88 cents per share, in the fourth quarter ended Dec. 31, from $899 million, or 89 cents per share, a year earlier.
Total revenue, net of interest expense, fell to $8.02 billion from $8.39 billion last year.
Analysts on average had estimated a profit of 97 cents per share, according to Thomson Reuters I/B/E/S.
Up to Thursday’s close, AmEx stock had risen about 15.5 percent since the U.S. election.
Reporting by Nikhil Subba in Bengaluru; Editing by Shounak Dasgupta