By Avik Das
(Reuters) - American Express Co (NYSE:AXP), the world's largest credit card issuer, reported quarterly revenue that fell short of analysts' estimates, hurt by a stronger dollar and the loss of several co-branded tie-ups.
AmEx's shares fell 1.4 percent to $79.80 after the bell on Thursday.
Revenue from international operations, net of interest expense, fell 8 percent to $1.24 billion in the quarter ended March 31, accounting for about 16 percent of AmEx's total revenue.
The dollar, which has gained about 22 percent in the past 12 months against a basket of major currencies, has been a spot of bother for U.S. multinational companies.
Total revenue, net of interest expense, fell 2.7 percent to $7.95 billion. Analysts had estimated revenue of $8.20 billion, according to Thomson Reuters I/B/E/S.
"AmEx investors generally view tougher revenue comps as more negative than they would for another company," Janney Montgomery Scott LLC analyst Sameer Gokhale said.
AmEx also said the termination of several co-branded relationships, including that with Costco Wholesale Corp (NASDAQ:COST) in Canada last year, hurt revenue.
"We are now seeing the full impact from the termination of this relationship," a company executive said in a post-earnings conference call, referring to the Costco partnership.
AmEx's exclusive agreement with Costco in the United States, under which the retailer accepts only AmEx cards, is also set to end next March. The tie-up accounts for 8 percent of spending on AmEx cards.
Stiff competition has made the "co-branded" credit cards business increasingly tough across the industry due to wafer-thin margins. Such cards make up about a third of AmEx's purchase volume.
AmEx, which also ended a co-branded deal with JetBlue Airways Corp in the first quarter, said in February the loss of the Costco contract in the United States would hurt earnings for the next two years.
Sluggish revenue growth in recent years has forced the company to rein in costs. It plans to cut more than 4,000 jobs this year.
AmEx, which raised interest rates for a large number of its credit cards for the first time in five years in February, also lost a case filed by the U.S. government and 17 states, which accused it of violating antitrust laws by prohibiting merchants from steering consumers to use cheaper credit cards.
AmEx shares closed at $80.91 on Thursday on the New York Stock Exchange.