Current Events and Blog

16Jul 2016

Citi CEO Says He's Focused on Fixing Costco Credit-Card Woes – Bloomberg


Citigroup Inc. said it has deployed “a lot of resources” to ease the deluge of inquiries and complaints from Costco Wholesale Corp. customers after taking over as the retailer’s exclusive credit-card issuer last month.

“We experienced extremely high calling volumes in the early implementation of it,” Chief Executive Officer Mike Corbat said in a conference call with analysts Friday after the company reported second-quarter results. “Questions around card activation, questions around statements, questions around where to send payments, and so we’re working through that. We’re gaining on it. We’re very focused on it.”

Costco, the largest U.S. warehouse chain, decided in 2015 to end its 16-year relationship with American Express Co. after the firms couldn’t agree on card fees. Richard Galanti, the retailer’s finance chief, said last month that caller wait times averaged 30 to 40 minutes during the June 20 rollout and fell to less than 10 minutes later in the week as Citigroup increased the number of customer-service representatives fielding calls.

Citigroup’s credit-card franchise, led by former AmEx executive Jud Linville, reported growth in purchases and revenue during the second quarter, fueled by the Costco acquisition, which also contributed to a 5 percent jump in companywide operating expenses, according to the New York-based bank.

‘Very encouraging’

“The early results from Costco have been very encouraging,” Citigroup Chief Financial Officer John Gerspach said during the conference call. Purchases made with the cards totaled $5.7 billion in the first 3 1/2 weeks, with two-thirds of that spending occurring outside of Costco stores. The loan portfolio, which held $10.6 billion when Citigroup acquired it, grew to $11.3 billion by the end of the second quarter, he said.

Galanti said Friday that the switch proved to be a “huge task” and that the Issaquah, Washington-based retailer has no regrets about choosing Citigroup as its card partner.

“It’s a much-improved value proposition for our members,” he said in a phone interview.

Citigroup came in second-to-last out of 10 companies in a J.D. Power credit-card customer satisfaction ranking last year. AmEx slid to second place behind Discover Financial Services after holding the top spot in the survey’s first eight years.

“We’ve got a lot of resources deployed against it,” Corbat said of the Costco launch. “It’s something we think we can fix in short order.”

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16Jul 2016

Nice attack will likely have only short-term impact on the travel industry – MarketWatch


In the wake of the Bastille Day attack in Nice, France, that killed more than 80 people and injured hundreds more, analysts say the tourism industry could see a short-term slowdown but don’t expect a long-term impact.

“It’s obviously a tragedy and horrible, but I do not expect a major impact on travel demand,” said Jim Corridore, airline analyst at S&P Global Market Intelligence. “Most people want to live their lives, make their travel plans and see the world.”

Travel company shares including United Continental Holdings Inc. UAL, -0.88%  , Priceline Group Inc. PCLN, -1.16%   and cruise company Carnival Corp. CCL, -2.16%   closed down on Friday.

See also: France terror attack prompts selloff in travel, airline stocks

But Corridore doesn’t believe airline declines are related to this latest attack.

“I don’t think that the airline stocks are moving today on France news,” said Corridore. “The amount that stocks are off isn’t meaningful. There’s no coupling of these events.”

Rather, Corridore believes news like earnings reports are making an impact. Delta Air Lines Inc. DAL, -2.44%   announced this week, along with its earnings, that it would be cutting its U.S.-U.K. winter capacity because of currency concerns caused by the Brexit vote.

JetBlue Airways Corp. JBLU, +0.38%  , which closed up on Friday, jumped Wednesday after it reported monthly traffic growth.

See also: Nice is part of a depressing trend: 28,000 people died in terror attacks in 2015

“Generally after these terrorist attacks occur, there’s a lull for a short period of time (a week or two), but demand seems to resume,” said Jaime Katz, an equity analyst at Morningstar who covers cruise lines. “There’s a temporary downtick in demand and then business as usual in a few weeks.”

What would be of greater concern, according to Katz, is a “secular psychological shift,” such that people didn’t want to go anywhere. But that hasn’t happened, perhaps because people don’t want to “feel the terrorists are winning.”

“No one wants to feel oppressed by what’s happening,” she said.

In the short-term, the third quarter has just begun and summer travel is booked. “Of course, there will be some cancellations,” said Tuna Amobi, senior equity analyst at S&P Global Market Intelligence. Among the companies he covers are TripAdvisor Inc. TRIP, -0.39%  , Priceline and Expedia Inc. EXPE, -0.44%  

See also: These stocks are the biggest post-Brexit winners and losers in the U.S.

Though there might be some near-term impact, “it’s very difficult to make a connection between one terrorist attack and other things,” Amobi said. Brexit, which has brought uncertainty and currency volatility, is among the “other things.”

“When you talk about just one factor, you have to take it with a grain of salt,” said Amobi.

What could have a bigger effect is an increase in the frequency of the attacks, experts say.

“If we see these incidents on a weekly or monthly basis, all bets are off,” said Corridore.

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