Enjoy whipping out your Amex at Costco for now. According to an announcement today by American Express, you won’t be able to use that card at Costco after March 2016.
“We are proud of the value created over many years for Costco, for our card members and for our shareholders,” said Kenneth I. Chenault, chairman and CEO of American Express, in this statement. “Taking a very disciplined approach, we began discussions on a possible renewal with Costco well in advance of the contract expiration. However, we were unable to reach terms that would have made economic sense for our company and shareholders. Instead, we will focus on opportunities in other parts of our business where we see significant potential for growth and attractive returns over the moderate to long term.”
And while the current agreement expires next March, Business Insider reports that the announcement is taking its toll on Amex — stock is down about 6 percent.
What’s the reasoning behind not finding a way to co-brand with Costco? In a call with investors, Amex executives explained their decision.
“The move to accelerate discussions led us to renew several key co-brand relationships in 2014, including our long-standing partnerships with Delta, Starwood and Cathay Pacific,” they said in this transcript.
“We were delighted to extend each of these strong relationships for multiple years. These are broad partnerships that include joint marketing initiatives as well as tie-ins with our Membership Rewards program, and travel and lifestyle services…We attempted to reach a similar outcome with Costco, but, unfortunately, we were not able to agree on terms that made economic sense for us and our shareholders. Instead, as I said earlier, we will invest in other opportunities that we think can generate greater returns.”
So, I guess get used to swiping your Visa on those Costco runs? I hear it’s everywhere you want to be.
Update: As noted in the comments below, Costco currently doesn’t accept non-Amex credit cards (just debit cards), so it’s an open question as to how the wholesale chain will proceed after the Amex deals end.
