American Express has announced that it will lay off 5,400 staff members and incur restructuring costs of $400 million as it revealed fourth quarter earnings that widely missed analyst estimates.
Thanks to the restructuring charges, $342 million in expenses and $153 million in reimbursements and fees, Amex’s net income for the quarter was $637 million, or just $0.56 per share.
The company’s Q4 net adjusted income, excluding the items above, sat at $1.2 billion, or $1.09 per share, which would have largely met Thomson Reuters expectations of $1.06 per share.
“All of this has been taking place at a time when technology is transforming the world of commerce, regulatory changes are reshaping the financial industry, and customer loyalty has become more important than ever,” said Kenneth Chenault, chairman and chief executive officer at Amex. “Maintaining our momentum in this environment will require us to evolve our business, embrace new technologies, become more efficient and generate resources to invest in the many growth opportunities we’ve identified.”
According to the Amex announcement, the 5,400 eliminated jobs will come from seniority levels, businesses and staff groups but will hit the its travel business the hardest. The release cited an “industry that is being fundamentally reinvented as a result of the digital revolution” as cause for the terminations.
Overall, Amex will reduce its staff of 63,500 by between four and six percent.
“For the next two years, our aim is to hold annual operating expense increases to less than 3 percent,” Chenault said. “The overall restructuring program will put us in a better position as we seek to deliver strong results for shareholders and to maintain marketing and promotion investments at about 9 percent of revenues.”
AmEx $8.1 billion in Q4 revenue is up 5 percent form the same period a year ago. The company posted earnings of $1.09 per share in Q3 2012.