American Express' 3 Step Plan to Get Back on Track

American Express Marketing Expenses

American Express Company (NYSE: AXP) reported earnings last week in what was largely a mixed bag. Revenue came in at $8.02 billion, an approximate 4% decline from last year's fourth quarter. On a GAAP-basis, earnings per share were $0.88, a decline of only 1% year over year (but note that adjusted EPS was down more than 25% to $0.91). Billing growth decreased about 3%.

Earnings Conference Call Q4'16 Slide Presentation

Still, if these customers are of the same industry-leading credit quality as American Express's existing card members and prove to be more profitable than customers previously acquired through co-brand channels, it might be money well-spent.

3. Increase in merchant coverage

Campbell said the company is working hard to repair its perceived image of not being accepted by many merchants when reality is far different.

Shop Small was a fourth quarter campaign designed to highlight smaller merchants in the geographic area of the card holder now accepting American Express as a method of payment.

OptBlue is another campaign they're running aimed at retailers who do not yet accept American Express. The program attracts new merchants by offering different price options, free online ads, and a listing on the Shop Small Map. It is easy to see how these benefits would appeal to small business owners.

By returning capital to shareholders, finding more-profitable new customers through its own channels, and expanding its merchant coverage, American Express hopes to signal to the market that it is not only over Costco, but better off for it as well. If management can do all this without spending record amounts on marketing every quarter and still return significant capital to shareholders, the company might even be able to pull it off.

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Matthew Cochrane has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Costco Wholesale. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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