NEW YORK - In an acknowledgment of tough times ahead in the credit card industry, American Express Co. said Thursday that it plans to cut 7,000 jobs, or about 10 percent of its worldwide workforce, in an effort to reduce costs by $1.8 billion in 2009.
The New York-based credit card issuer -- which has reported four straight quarters of profit declines as an increasing number of consumers struggle to pay off debt -- said it is also suspending management-level salary increases next year and instituting a hiring freeze. The job cuts will primarily focus on management.
American Express said it plans to scale back investments in technology and marketing and business development, and streamline costs associated with some rewards programs. It plans to take a restructuring charge of $240 million to $290 million in the fourth quarter.
Last week, American Express reported a 24 percent decline in third-quarter profit. The report echoed recent results from J.P. Morgan Chase & Co., Citigroup Inc. and Capital One Financial Corp., showing that the credit card environment is worsening as cardholders have trouble paying off debt and reduce their spending.
Even a company like American Express, which prides itself on catering to a more well-heeled clientele, is not immune. Its customers tend to be more affluent than those of other card companies, but they are more heavily concentrated in California and Florida, where the slumping housing market is taking a toll.
Shares rose 85 cents, or 3.4 percent, to close at $26.06.
ASSOCIATED PRESS
