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American Express (AXP) to Offer Card Service at Sam's Club

American Express CompanyAXP announced that it has struck an alliance with Sam's Club, the warehouse arm of Wal-Mart Stores Inc. WMT .

Per the agreement, customers will now be able to make payments through American Express at more than 650 warehouse club locations in the U.S., effective Oct 1.

Sam's club serves nearly 500,000 small businesses on a daily basis. These businesses will benefit from the frills such as Small Business Saturday, Shop Small, OptBlue and Merchant Financing provided exclusively by American Express.

The partnership with Sam's Club - the eight largest retailer in the U.S. - reflects American Express' persistent efforts in expanding its network to make up for the lost revenue, after it failed to renegotiate its partnership agreement with retail prime Costco Wholesale Corp. earlier this year. The contract with Costco will expire on Mar 16, 2016.

Given the magnitude of the relationship with the retailer, management does not anticipate reaching its earnings per share growth guidance until 2017. The business implication will be negative as the Costco U.S. co-brand partnership accounts for about 8% of total card member spending, 10% of worldwide cards and 20% of worldwide loans. At a conference call with analysts, management stated that it now expects earnings to be flat in 2015.

American Express' move to tie up with new partners signifies it efforts to sustain earnings growth amid numerous headwinds faced by it including uneven global economic growth and intense competition. In addition, American Express' results continue to be significantly impacted by a strengthening U.S. dollar. The company expects foreign exchange to have an adverse impact for the remainder of 2015. American Express' results could also be affected by increases in interest rates, which the Fed will probably consider in its next meeting.

American Express carries a Zacks Rank # 3 (Hold). Some better-ranked stocks in this space are Blackhawk Network Holdings, Inc. HAWK and Consumer Portfolio Services, Inc. CPSS .Both stocks carry a Zacks Rank #2 (Buy).

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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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