American Express Says Travel, Entertainment Spending Improving -- Update
April 23 2021 - 12:02PM
Dow Jones News
By Allison Prang
American Express Co. is seeing consumer spending start to
normalize as Covid-19 vaccinations pick up in the U.S. a year into
the pandemic.
Spending in travel and entertainment categories last month rose
40% from February and bookings through American Express Travel
jumped by 50% in the first quarter compared with the fourth
quarter, Chief Financial Officer Jeff Campbell said in an interview
Friday. He also said the number of people signing up for the
company's co-branded cards with Delta Air Lines rose 90% in the
quarter compared with the fourth quarter.
Card companies took a hit over the past year as lockdowns to
stop the spread of the coronavirus led to consumers spending less
on travel and entertainment.
Mr. Campbell said there is an inflection point around the
improving economy and increase in vaccinations.
"People are finally able to exercise the pent-up demand for
travel that we believed in the whole time," he said.
Billed business in the first quarter for goods and services rose
6% from a year earlier adjusted for currency fluctuations. That
business fell by half from a year earlier for the travel and
entertainment category for the entire quarter, but it rose in March
compared with declines in January and February.
While travel and entertainment spending is showing signs of
improving, Mr. Campbell said the company doesn't think cross-border
travel will have fully returned to its 2019 level by 2022.
"In 2022, we're really assuming...that consumer travel and
entertainment spending is mostly back to where it was
pre-pandemic," Mr. Campbell said on the company's earnings call
Friday, adding that "domestic travel in the U.S. and around the
globe will be the fuel that gets us to that level."
Even as the economy and consumer behavior have started to
normalize, the company saw e-commerce spending still rise 23% year
over year.
"As that physical retail has come back it has not cannibalized
the growth we had seen in online and ecommerce," Mr. Campbell said
in the interview.
For the quarter, American Express had a provision expense
benefit of $675 million. The company's provision a year earlier to
cover potential credit losses was $2.62 billion.
Profit for the first quarter rose to $2.24 billion, up from $367
million a year earlier, and the company's earnings were $2.74 a
share, topping Wall Street's consensus according to FactSet of
$1.61 a share. A year ago, earnings were 41 cents a share.
Revenue at the company, net of interest expense, fell 12% to
$9.06 billion, while Wall Street was expecting $9.21 billion.
American Express shares were down 2.4% at $143.65.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
April 23, 2021 11:47 ET (15:47 GMT)
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