Amex’s New Strategy? Return To The Old Strategy – Focus On The Affluent

It’s been a rough year so far for Amex – they lost Costco, they lost Jet Blue and then they lost their anti-trust case. So what is Amex doing?  Getting back to its roots and focusing on rich people.

“You’ve seen us enter new consumer spaces, but we’re also getting really invested in continuing to rebuild our premium cards,” said Lisa Durocher, the company’s senior vice president of charge and benefits.

Yesterday (February 27) Amex announced a host of new benefits for gold card holders that include double points for restaurants transactions, a personalized travel service and $100 annual credit for airline incidentals, including meals and baggage surcharges. Amex will also be dropping its foreign transaction fees.

When the new services go online in June, there will be a price for cardholders.  The annual membership fee for the premier rewards gold card will rise $20, to $195 per year. The regular gold card is going up to $160 from $125.

The move on Amex’ part to shore up their core business comes with the firm eliminating 4,000 jobs, or about 6 percent of its work force. Between that, Costco, JetBlue and the court loss, Amex stock, which traded at $94.27 a share on Dec. 29  was down to $78.08 by Feb. 13. It has since crept up, and on Thursday closed at $83.25.

“That will be a loss of business that they need to replace,” said John Hecht, an analyst at Jefferies. “What they’re doing now is working hard to replace it. That would be a perfect backdrop to why they are increasing their rewards.”

Because restaurant transactions are a big part of gold card charges, the double points will please consumers, but hurt Amex.

“We chose the most important spend categories,” Durocher told The NY Times, “to give the benefit to people on the things they love to do.”

The company would not disclose any revenue numbers, but it said the gold cards were the prime engine of growth in its charge-card portfolio, which is at the core of the company’s business.

Amex has begun teaming up with various businesses to allow cardholders to pay with their Amex points at the point of sale, including Amazon, the car-sharing service Uber, New York City taxis and McDonald’s.