With a stock price down by almost a full 24 percent year to date and investors worrying over competitive positioning, American Express is reorganizing some of its management structure and looking to shave $1 billion in operating costs over the next couple of years.
Bloomberg said Wednesday (Feb. 17) that it will attempt to accomplish this at least partly through streamlining and consolidating some marketing activities. CEO Ken Chenault said in a statement: “To get ahead of the changes that are altering the dynamics of the payments business, we need to readjust our expense base. This is a big task. It essentially means that we must transform the way the company works.” There will be job cuts in the offing, said the CEO. “At this time, we do not know what the magnitude of those reductions will be, as decisions on specific positions affected are yet to be made.”
Amex has suffered a number of setbacks in recent months, among them the loss of a lucrative and important relationship with Costco.
As a result of the challenges, the payments giant is launching a global marketing operations unit to be helmed by Mike McCormack, who will report to Tammy Weinbaum, executive vice president of global business services. Chief Marketing Officer John Hayes is leaving his post. Separately, Amex is starting an enterprise digital group, tasked with synthesizing mobile and digital initiatives, that will be led by Luke Gebb.
In the risk department, the firm’s global banking president, Paul Fabara, is coming on as chief risk officer. And, in addition, American Express said it will merge its world service and global credit administration operations into a single unit.