Kenneth Chenault, the head of American Express Co. and one of the country's most prominent African-American corporate leaders, will step down as chairman and chief executive Feb. 1, capping a 16-year run at the iconic card company as it grapples with a new wave of competition.
The 66-year-old executive will be succeeded as CEO by Stephen Squeri, a three-decade AmEx veteran who previously ran its division in charge of corporate cards. As vice chairman since 2015, Mr. Squeri, 58, had spent more time meeting with shareholders, leading many to believe he was on the shortlist to be the next chief executive.
Shares added 0.4% to $92.45 in after-hours trading as the company also reported stronger-than-expected earnings and revenue for the third quarter and raised its profit guidance for the year.
Mr. Chenault's departure comes after a tumultuous period in which he fought to revive AmEx's fortunes following the loss of a key partnership with Costco Wholesale Corp. and as the company's pre-eminent product, the Platinum card, came under attack from J.P. Morgan Chase & Co.'s Sapphire Reserve card.
Mr. Chenault had a stellar run for most of his time atop the New York-based company. But AmEx's recent travails have cast a shadow over his tenure -- something he fought to escape before stepping aside.
Despite a booming credit-card market that recently surpassed $1 trillion in balances, AmEx has ceded market share and some shareholders have questioned where long-term growth will come from. Many senior executives have left the company, and Mr. Chenault suffered a personal loss with the unexpected death in 2015 of his would-be successor, AmEx President Ed Gilligan.
The company's main focus in recent years has been ramping up lending to consumers and small businesses while also searching for new ways to appear to millennials, many of whom crave different kinds of rewards and are more comfortable moving money with their phones than a credit card.
Mr. Chenault's departure comes after a recent rebound in the AmEx stock, as the company addressed some of shareholders' biggest concerns. In the past year, shares have rallied more than 50%, compared with a 28% rise in the Dow Jones Industrial Average. In recent months, the company has notched a few victories, and shareholders say Mr. Chenault has appeared more upbeat and confident in his meetings with them.
In early June, the company said it won the rights to become the exclusive issuer of the Hilton Worldwide Holdings Inc. credit cards starting in 2018, beating out Citigroup Inc.
Few would argue that the credit-card market has changed dramatically since Mr. Chenault took over in 2001. Two of the most significant changes: increasing competition from banks and more emphasis on rewards for consumers.
AmEx has traditionally focused on card holders who pay their bills in full each month, but that means the company doesn't typically generate the interest revenue needed to offer as much in points and other quantifiable rewards that some big banks have been doling out.
Meanwhile, for the third quarter, the company reported a profit of $1.36 billion, or $1.50 a share, up from $1.14 billion, or $1.20 a share, a year earlier. Revenue, net of interest expense, rose 8.5% to $8.44 billion. Analysts surveyed by Thomson Reuters had projected $1.47 a share in earnings on $8.29 billion in revenue.
American Express now expects to make $5.80 to $5.90 a share for the year, up from its earlier view of $5.60 to $5.80 a share.
AmEx again increased the money set aside for possible losses to $769 million, up 53% from the year-ago period, which it attributed to continued growth in its loan portfolio and an expected increase in lending write-off and delinquency rates.
Expenses rose 5.5% to $5.84 billion with card members rewards and card member spending accounting for the bulk of the increase.
Write to AnnaMaria Andriotis at email@example.com
(END) Dow Jones Newswires
October 18, 2017 17:32 ET (21:32 GMT)