American Express wants even more credit card high spenders

American Express Even for a credit card provider to the wealthy, we find it helpful to focus on the high-stakes ones.

CEO Stephen Squeri said the company recently shifted its marketing budget to the revamped Platinum card, which carries an $895 annual fee, and is moving away from free cash-back cards. said Analysts said Friday after the company reported its fourth quarter results.

Doing so has helped increase overall spending levels as premium consumers continue to evolve, executives said, and the tactic has led to both increased fee revenue from premium cards and reduced loan defaults.

“We have the ability to be really flexible in our marketing investments and have seen tremendous demand for premium products, especially the Platinum card,” Squeri said.

“The overall portfolio is slowly gaining more premium [as] “Platinum’s portfolio is growing very quickly,” he added.

AmEx’s change of strategy is the latest example of the end of the so-called “K-shaped” U.S. economy, in which wealthy consumers continue to spend freely while others rein in their spending. Data from the card company shows demand for high-end products and luxury experiences is on the rise, while purchases in more basic categories are growing more slowly.

Spending at luxury retailers rose 15% in the quarter, business and first-class airline ticket purchases rose 9%, and luxury hotel spending rose 12%, CFO Christophe Le Caillec told CNBC in an interview.

Meanwhile, airline and lodging spending overall rose 3% and 5%, respectively, in the quarter; This shows that the wealthiest card members are seeing positive results.

AmEx in question On Friday, it was announced that new card accounts reached 2.9 million by the end of the year; decrease compared to the third quarter and the lowest figure in the last five quartersThe company focused on more profitable card products.

“We are increasingly concerned that the Platinum Card renewal is not generating much interest,” BTIG analysts led by Vincent Caintic said, citing new competition from other card issuers and consumers growing tired of high fees and cumbersome benefits.

Although the company did not disclose the total number of card members, including the Platinum card, Squeri told analysts on Friday that “all the metrics we looked at point to the fact that this was an extremely successful product launch.”

Still, shares of AmEx were down about 3.5% in midday trading after the company’s results and guidance disappointed some.

earnings per share At $3.53, LSEG said it was a penny below the consensus estimate.

The company said this was due in part to higher-than-expected expenses of $14.5 billion resulting from Platinum renewal costs.

“If anything, it’s perhaps that Q4 clearly shows the cost of the Platinum renewal but doesn’t show a corresponding increase in new accounts,” Truist analyst Brian Foran said in a research note. he wrote.