NEW YORK – Financial services group American Express Co. said on Monday third-quarter profits dropped 60 percent as people cut back on shopping and travel after the Sept. 11 attacks.
American Express earned $298 million, or 22 cents a share, in the third quarter, compared with $737 million, or 54 cents, in the same period last year. Revenues fell 1 percent to $5.5 billion. A previously announced restructuring charge of $352 million also cut into results.
Wall Street expected American Express to earn between 19 cents and 36 cents a share, with a mean estimate of 30 cents a share, based on analysts' reduced forecasts, according to market data firm Thomson Financial/First Call.
Americans canceled vacations and avoided stores and restaurants, eroding American Express' revenues from charge cards and travel services in an already-weak economy. The New York-based company, known for its signature green charge cards, warned of a profit shortfall in September, after companies shelved business trips.
American Express is cutting about 6,100 jobs in the second half of this year, and has written down junk bond losses, and overhauled units to boost profits. The weak economy, stock market slump and junk bond losses this year have hurt results across its units, including at its Financial Advisors investment business.
American Express stock rose 68 cents to $30 Monday on the New York Stock Exchange. The shares dropped nearly by half over the first nine months of the year, underperforming a 16 percent drop in the Standard & Poor's index of financial stocks.
Profits at its travel-related services arm, which includes its vast charge-card operations, fell 51 percent from a year ago to $248 million in the quarter.
Its Minneapolis-based Financial Advisors arm posted a 46 percent drop in profits to $145 million from a year ago, amid ongoing weakness in stock markets. The unit was hit by large writedowns in its junk bond portfolio that battered American Express results.