Yahoo Finance’s Alexis Christoforous and Brian Sozzi speak with Emily McCormick for the latest on earnings from American Express, Bloomin’ Brands and Intel.
Video Transcript
ALEXIS CHRISTOFOROUS: Yahoo Finance’s Emily McCormick has been tracking this morning’s earnings reports. It’s been a busy morning so far. Emily, I want to start with American Express. Any clues there that credit card activity is starting to pick up during this pandemic?
EMILY MCCORMICK: Well, Alexis, taking a look here at American Express’s results, they did point to improving trends but still down sharply, due to the pandemic, especially when we consider where they were at last year. Now just taking a look at these top and bottom line results, we did have the company posting third quarter earnings of $1.30 per share. That missed consensus estimates by $0.04 as the ongoing pandemic weighed especially hard on corporate credit card spending. Now, we also saw revenue of $8.75 billion down 20% over last year, but still a bit better than the about $8.6 billion that had been expected.
Now the company said that it had been seeing a quote, “steady recovery in overall spending volumes,” although the company’s build business was still down 19% over last year to about $249 billion. Now, I want to highlight that CEO Stephen Squeri did mention in this morning’s release that the company saw positive year over year growth in its non-travel and expense spending, so that suggests that those retail consumers, not necessarily those corporate card customers, but general consumers are starting to pick up on their card spending. He said that while credit remains strong, delinquencies and net write offs are at their lowest level we have seen in a few years. We remain, quote, “cautious about the direction of the pandemic and its impact on the economy, which is reflected in our reserve levels.”
Now, the company overall did see its provisions for credit losses down 24%, but they did build up reserves in their global commercial services business for provision for up 13% over last year to $250 million. So still padding a little bit there for potential downturns due to the pandemic, Alexis and Brian.
BRIAN SOZZI: And Emily, it looks like over at Bloomin’ Brands, they sold a whole bunch of $15 steaks at Outback.
EMILY MCCORMICK: They did, but we did see Outback actually starting to stem some of those declines on those comparable same store sales. Those comps still down 10.4%, but better than some of the other companies or brands, rather, within the Bloomin’ portfolio. We saw Bonefish Grill and Fleming’s Prime House Steak House and Wine Bar each down 20% on that comparable sale side, or at least 20%. So a little bit better here on the Outback Steakhouse side of things.
Now, just taking a look overall, the company’s comparable sales drop of 12.8% was better than the 15 and 1/2% decline expected, and that adjusted loss per share of $0.12 also better than the $0.32 loss per share expected, even as the company went ahead and did not furlough any workers during the pandemic. That’s something they’ve remained committed to. Still able to keep those margins somewhat intact here with a less steep loss per share than expected, Alexis and Brian.
ALEXIS CHRISTOFOROUS: Emily, we also have Intel out this morning. The stock is absolutely getting creamed here in the pre-market down about 10%. There was a surprise drop in data center sales. Tell us more about that.
EMILY MCCORMICK: Well, Alexis, taking a look at this data center group sales results, really coming in much weaker than expected. That was an unexpected decline there of 7 and 1/2% to $5.9 billion in sales in that segment. But remember that the data center group typically comprises a pretty significant portion of Intel’s profitability, so to see that weakness, really something that the Street wasn’t hoping to see for this quarter. Now, we also saw operating margin here narrow to 32% in that data center group. That was down from 49% a year earlier. So again, average selling prices for data center chips have had to come down for Intel because of competition. Again, as more things really to worry about here for Wall Street, Alexis and Brian.
ALEXIS CHRISTOFOROUS: All right, Emily. Thank you.
