American Express Co. warned it’s planning to increase spending on marketing in the coming months after billings growth on the payments giant’s credit cards slowed in the second quarter.
The company now expects this year’s marketing expenses to be about 15% higher than they were in 2023, Chief Executive Officer Steve Squeri said in a statement Friday. That comes after second-quarter billed business — a measure of customer spending on the firm’s credit cards — grew less than analysts estimated.
Even with the increased spending on marketing, Amex raised its full-year guidance for profit to $13.30 to $13.80 a share after it booked a gain tied to the sale of its fraud-prevention provider, Accertify. The previous forecast was $12.65 to $13.15.
“We believe we can increase our marketing investments by around 15% over last year without using any of the transaction gain, while still delivering exceptional earnings results this year,” Squeri said. “As a result, we have made the decision to drop the entire gain to the bottom line.”
Billed business rose 5% to $388.2 billion in the second quarter, missing the $391.6 billion average of analyst estimates compiled by Bloomberg.
Amex is known for premium cards that attract legions of young consumers willing to pay hundreds of dollars in annual fees in exchange for tony perks and access to the firm’s airport lounges.
The company continued its pursuit of consumers focused on travel and leisure during the quarter with the acquisition of Tock for $400 million from Squarespace Inc. Amex has long curated its offerings to encourage already-willing spenders to spend more, and Tock, which offers reservations, table management and event ticketing to around 7,000 restaurants and other entertainment outlets, complements that goal.
Amex fared the best of its peers in the Federal Reserve’s annual stress tests, which mimic a hypothetical recession. That being said, loan-loss provisions increased 8.3% to $1.3 billion, driven by higher net write-offs.
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