September 23, 2021

American Express Income Falls On Expenses

The company, which is based in Manhattan, had previously alerted investors that its earnings would be taking a hit in the October-to-December period as a result of booking about $594 million in after-tax charges.

The biggest portion of the costs pertains to a revamping plan that involves cutting some 5,400 jobs, mostly from the company’s travel business. The strategy aims to put the company in better position to cater to customers increasingly turning to online and mobile devices to shop, pay bills and make travel plans.

The rest of the charges were related to the company’s cardholder rewards program and for reimbursements of interest and fees.

Expenses aside, American Express was lifted by an 8 percent increase in cardholder spending during the quarter, which coincided with the holiday season, regularly a period of heightened spending by consumers.

American Express cardholders tend to be more affluent than other credit card users, and the company has done well in the slow, bumpy recovery from the recession.

The company has noted that credit card authorization volume surpassed previous single-day volumes 12 times during the quarter.

American Express reported net income of $637 million, or 56 cents a share, for the three months ended Dec. 31. That compares with net income of $1.2 billion, or $1.01 a share, in the fourth quarter of 2011.

Excluding the after-tax charges, American Express’s earnings amounted to $1.09 a share. Analysts polled by FactSet were expecting adjusted earnings of $1.06 a share.

The company’s revenue for the quarter grew 5 percent, to $8.14 billion, in line with analysts’ forecast.

Shares of American Express rose 12 cents in after-hours trading after closing at $60.62.

Article source: http://www.nytimes.com/2013/01/18/business/american-express-income-falls-on-reorganization-costs.html?partner=rss&emc=rss

Square Feet | The 30-Minute Interview: The 30-Minute Interview — Fred J. Schmidt

Previously, Mr. Schmidt was the senior vice president for business development and operations for Coldwell Banker Commercial.

Interview conducted and condensed by

VIVIAN MARINO

Q. Coldwell Banker recently re-established a commercial office in Manhattan, about a year after the closing of Coldwell Banker Hunt Kennedy, which had a commercial operation.

A. When I took over as the president of the company last year, our New York office had just signed on the Realta Group; it’s a franchise and affiliation owned by Peter Sabesan and Richard Selig. They both have a long tenure in the business. In my prior role, I was part of the process of initiating that growth.

Q. How important is it to have a New York presence?

A. It’s a fulcrum for us, as it is in our industry, in terms of the gateway of companies coming in internationally.

Q. How active is that office?

A. It’s very active. Their property management has grown by 30 to 40 percent.

They’re managing throughout the New York metro area and actually throughout the United States. I don’t have total statistics. I think it’s more in that medium-sized square footage and marketplace.

They’re more of a tenant rep. Some of their tenants include the American Cancer Society, American Express, Bally’s Fitness, Bank of America, the Brooklyn Navy Yard.

Q. Why did Coldwell Banker Commercial decide to franchise that office instead of own it?

A. To grow it organically or to buy someone, frankly, was just not something that was in the cards. We try to find the best qualified companies to do that, and to grow from there.

We get the franchise fees, the growth of the network — New York is so mission critical to supporting business throughout the United States. When you’re looking at many of the businesses that are located here, they’re exporting business all around the U.S. and the globe. A lot of times they may have real estate needs elsewhere.

Right now we’re working with a major warehouse and distribution firm in the fashion industry that has a 200,000-square-foot requirement out in Los Angeles. The company is headquartered in New York, so that business is exported from Manhattan. I can’t tell you the name of the company; I have a nondisclosure. Q. What kind of fees does Coldwell Banker Commercial receive from its franchisees?

A. Typically it’s 6 percent of the gross commission income. And they get all the services: the resources of our global client solutions group, technology, the branding, the name, advertising and marketing.

About 30 percent of our offices are company owned, and the balance are franchises. We also have three offices in New Jersey, two in Connecticut and three on Long Island.

Q. How was business last year?

A. I can’t give specific numbers, because that’s within the overall organization, but we’re mirroring what’s going on with the rest of the industry: 2010 was an improvement over 2008 and 2009, and 2011 was an improvement over 2010.

The retail sector for us has actually been surprisingly active — even though retail has been at an all-time high in terms of vacancies. Multifamily has been as hot as a pistol. The office sector is employment driven, but we’re actually seeing pretty good activity around the country as a result of companies looking to upgrade from Class C to B or from B to A space. They can lower their costs over all because of the relatively high vacancies.

Q. What’s your outlook for 2012?

A. Slow to steady growth over all — given the macroeconomic factors that we’re all seeing over the last 90 days, the sovereign debt crisis and everything else.

Q. What are your plans for growing the company?

A. In the next 12 to 14 months, I’m looking to double or triple what we’re doing right now in the Northeast corridor, from Washington to Boston.

With a lot of market-driven change in the industry, there’s a tremendous amount of opportunities for mergers and acquisitions. We’ve been looking at other brokerages and bringing competitors on. A lot of folks operate their own businesses as entrepreneurs, but they’re seeing that to compete effectively in the market, the need to bolt onto a larger organization, yet still maintain their entrepreneurial spirit. Others have been running their businesses for many years and are looking at exit strategies.

This is where I spend most of my time, by the way. We have target markets, and an A, B and C list of individual companies.

Q. What kind of reaction have you received so far?

A. It’s actually been very positive — about 70 to 80 percent are still interested in talking to us on an ongoing basis. I would say we are talking in the hundreds in the whole United States, and in the Northeast corridor, 35 to 40. I can’t tell you the names.

Q. Were you always interested in real estate?

A. I started when I was 24 years old. My grandfather was a developer — he developed houses first and then garden apartments in New Jersey. Then I was in sales. Q. Do you invest in real estate personally?

A. I invest through REITs because they’re liquid. I use those investments to pay for my kids’ college.

Article source: http://feeds.nytimes.com/click.phdo?i=50c8ccc2d13db2ee608dda536975c0bd

Bucks: American Express Costco Card to Lower Restaurant Rebate

It’s a fact of life for credit card reward chasers — almost inevitably, the most generous cards end up scaling back the goodies sooner or later.

A while back, it was the Charles Schwab Visa that stopped paying a 2 percent rebate. And now it’s the Costco True Earnings American Express Card. Starting Aug. 1, the cash rebate will fall to 2 percent from 3 percent for restaurant purchases. Also, people who carry a less-used “Cash Rebate” version of the card will need to spend $7,500 in a year before they graduate to a higher cash-back earning tier that is unique to that card; currently, they need to spend $5,000.

These are the only changes that Amex is making. The 3 percent gas rebate will remain on the True Earnings Card for purchases up to $3,000 each year, and there is still no annual fee besides whatever you pay to be a Costco member each year.

So why this and why now? Leah Gerstner, a spokeswoman for American Express, said that rewards were expensive and that the company needed to make adjustments given the costs associated with increased regulatory scrutiny. “We still have some of the richest cards in the market,” she added.

Which is true. But the gluttons among us will soon be paying just a bit more out of pocket to feed our faces.

Meanwhile, any guesses as to which card will see the next devaluation?

Article source: http://feeds.nytimes.com/click.phdo?i=1ad21658c2a10f6622cf95be2922b11d

Recovery Seen in Rising Use of Credit Cards

This year, evidence is building that they are — with every swipe of their credit cards.

In the most recent quarter, covering January to March, American Express, MasterCard and Visa all reported increases in card spending. Business and consumer spending in the United States helped propel that growth, along with global growth and an increase in merchants that accept cards.

“The dust is slowly coming off credit cards,” said Gregory Daco, a senior economist with IHS Global Insight. “It is a general return of consumers to credit card usage, but it is a cautious one. Income is lower and slowly making a comeback right now.”

In the last few years, consumers and household budgets have been constrained by the housing crisis, a weak job market and, most recently, high energy prices. Economists now are cautiously forecasting a turnaround in spending. Consumers cut debt after the 2008 financial crisis, this year’s federal payroll tax cut is padding incomes, and consumers are adjusting to a labor market that appears to be stabilizing.

At the same time, the rate of deleveraging has been slowing, according to Federal Reserve data. Revolving credit balances, mostly credit cards, have generally been falling as demand declined, consumers used their cards less or paid them off, and banks wrote off nonperforming balances. Such balances reached $796.1 billion in March, compared with a peak of $973.6 billion in August 2008.

The most recent data show that revolving credit was up 2.9 percent in March compared with February, only the second monthly increase since late 2008. The other increase was in December 2010.

While these figures are moving in the right direction, Mr. Daco and other economists say there are still factors, like gas prices and other uncertainties, that could derail any progress.

“The positive news from the credit card issuers and processors is directly related to the increase in consumer spending over the past nine months and a more positive outlook for spending going forward,” said Cristian deRitis, the director of consumer credit analytics at Moody’s Analytics.

The card industry is a good gauge of how consumers are spending and what they are buying. It also shows how confident they are in reaching for their credit cards again. Consumers are starting to relieve some of the pent-up demand for autos, appliances and other goods that they had put off buying, analysts said.

“It is a psychological pall that is gradually lifting with the realization that the economy has in fact not been in recession for more than a year,” said David Robertson, publisher of The Nilson Report, a journal covering the consumer payments industry.

“It is incremental,” he added. “It is not blockbuster.”

The three biggest card brands, reporting their results for the latest quarter, say the trends point to relative growth of Americans’ consumer credit card use.

MasterCard said its first-quarter profit rose 24 percent, to $562 million, as people used cards more in global markets and to a lesser extent, as consumers swiped them more for nonessential items. Still, consumer spending in the United States has been surpassed by business spending.

“The recovery, such as it is in the United States, is really a commercially driven, as opposed to a consumer-driven thing,” Timothy H. Murphy, the chief product officer for MasterCard, said at a recent investor conference.

MasterCard’s credit card purchase volume was $115 billion in the first quarter of 2011, a 5 percent increase compared with the year earlier. While the company does not break down that spending, it said its consumer credit card spending rose. It was essentially flat in the fourth quarter of 2010 and negative going back to the second quarter of 2008. Analysts said that could mean consumers were returning to discretionary spending.

Visa, in its earnings report for the three months ending in March, showed $199 billion in credit purchase volumes in the United States, a 9 percent rise compared with the year-ago quarter. While the company did not break down the figure for consumers, the chief financial officer, Byron Pollitt, said credit was typically used more for discretionary purchases.

“As the economy recovers, our belief is that consumers, in combination with more employment, become more willing to spend on the discretionary side,” he said during a conference call.

American Express reported that first-quarter consumer spending on its cards in the United States reached $96 billion, up 13 percent compared with last year.

“Over all, we are seeing consumers spending again across all categories and including discretionary items like travel and entertainment,” a spokeswoman for the company, Joanna G. Lambert, said.

The quarterly results also suggest that more consumers were spending more freely, analysts said.

David J. Koning, a senior research analyst at Robert W. Baird Company, said that while American Express typically had a more affluent cardholder base, for example, growth was accelerating at Visa and MasterCard. That may reflect a broader economic recovery, he said.

Mr. Robertson, of The Nilson Report, added, “Those people at the very top are spending more quarter after quarter, as the wealthiest individuals overthrow whatever cloak of recessionary blues they might have had.”

He said, “And that is permeating and dropping down further into the American credit card public.”

Article source: http://feeds.nytimes.com/click.phdo?i=0337153d9e179a5c7807bfbed7481e6d

Bucks: Troubled Employers and Your Company Charge Card

Buried near the end of a lengthy New York magazine profile of voluptuous financier Lynn Tilton was a nugget that caught our eye here at Bucks.

The story describes how an employee at Stila Cosmetics, a company that Tilton’s firm, Patriarch Partners, bought in a distress sale 2009, complained to Ms. Tilton that some workers “had found themselves personally saddled with the bill for their corporate AmEx.”

(Stila previously was owned by Sun Capital Partners, but ended up in the hands of its lenders after Stila defaulted on a loan, according to an account of the sale in The Wall Street Journal that is posted on Patriarch’s Web site.)

That didn’t seem fair — and in fact the scenario appears to conflict with information provided by American Express as to how such situations are usually handled.

Molly Faust, a spokeswoman for Amex’s global commercial card business, said she is unfamiliar with the specifics of the Stila situation. But there are two ways that companies can handle corporate Amex accounts. In the first option, companies are liable for card balances, whether or not their workers follow the company’s expense policy.

In the second option, employees can be on the hook — but only if they break the rules, like buying personal items on the card. Ms. Faust said both setups are common.

In general, she said, whether they work for a company in a distressed sale scenario or not, “corporate card members,” as American Express calls them, aren’t liable for the balance as they have met their responsibilities in managing the account. Those include following their employer’s expense policy, filing timely expense reports and submitting any reimbursements promptly to American Express (in some cases, companies pay the employee, who then uses the funds to pay the Amex balance).

American Express generally works with the company and the employee to sort things out. If a situation arises in which the card holder has paid their balance but hasn’t been reimbursed when the company runs into financial woes, “we would work with the card member,” she said. “If they have fulfilled their responsibilities, they are not held liable.”

In other words, as long as you didn’t treat your family to dinner at The Palm and charge it to the company plastic, and you have filed your legitimate expenses on time, you’re off the hook.

Or you should be, at least. The story attributes the anecdote to Emil Gioliotti, Patriarch’s managing director. He didn’t respond to an e-mail seeking more details of what happened with Stila’s corporate card holders. A spokesman for Patriarch, Steven Goldberg, declined to comment and referred an inquiry to Sun Capital, Stila’s previous owner. A Sun Capital spokeswoman said that no one was available to comment.

If nothing else, you may want to be extra careful about saving receipts and filing expense reports quickly if you’re worried about your company’s health.

Meanwhile, have any of you ever had trouble getting reimbursed for work expenses, or for money you fronted to a corporate card provider when you worked at a troubled company? If so we’d like to hear about it.

Article source: http://feeds.nytimes.com/click.phdo?i=699635f437e4603642f8f3e95a870f86