American Express (AXP.N) has exceeded expectations for first-quarter profit, buoyed by robust spending from affluent consumers, while emphasizing the need to re-engage with U.S. small business customers for sustained growth. U.S. consumer spending surged by 8% compared to last year, while international consumer spending saw a notable 14% increase. However, spending by U.S. small and medium enterprises (SMEs) saw more modest growth at 1%.
CEO Stephen Squeri highlighted the softness in SME spending but expressed optimism about its potential to drive stronger spending in the future. Analysts praised the company’s focus on high-income clientele, which has shielded it from economic turbulence experienced by its peers.
AmEx’s strategic focus on premium consumers and SMEs, coupled with its expanding network, has positioned it well for aspirational top-line growth. The company maintains revenue growth expectations of 9% to 11% and a profit forecast of $12.65 to $13.15 a share for 2024. In the first quarter, profit surged by 31% to $2.44 billion, exceeding analysts’ average expectations.
The upcoming investor day on April 30 will provide insights into AmEx’s strategy for its premium consumer base and small business sector in the U.S. Additionally, the company will discuss revenue opportunities tied to its Gen Z and millennial customers.
Despite the impending acquisition of Discover Financial by Capital One Financial, which would create the largest credit card issuer in the U.S., AmEx remains unfazed. CFO Christophe Le Caillec emphasized the company’s commitment to executing its strategy irrespective of changes in the competitive landscape.
AmEx’s strong performance has resonated with investors, with shares rising by 4.8% to $224.86 following the announcement. As the company navigates evolving market dynamics, its emphasis on consumer segments and strategic initiatives underscores its resilience and potential for sustained growth.
