Costco Wholesale logo

COST - Costco Wholesale News Story

$425.28 3.9  0.9%

Last Trade - 29/07/21

Sector
Consumer Cyclicals
Size
Large Cap
Market Cap £134.30bn
Enterprise Value £132.11bn
Revenue £134.29bn
Position in Universe 60th / 7008

UPDATE 1-American Express sued for misleading investors about Costco

Fri 31st July, 2015 12:11am
(Updates with further description of lawsuit's claims, 
background on Costco deal) 
    By Nate Raymond 
    NEW YORK, July 30 (Reuters) - American Express Co  AXP.N  
was accused in a lawsuit on Thursday of blindsiding investors 
with the loss of a crucial contract with Costco Wholesale Corp 
 COST.O  after having failed to reveal how significant that 
business had become. 
    In a lawsuit filed in Manhattan federal court, shareholder 
Plumbers and Steamfitters Local 137 Pension Fund sought class 
action status on behalf shareholders who suffered losses after 
the credit card company in February announced the end of its 
co-branding agreement with the warehouse club retailer. 
    AmEx at the time said the loss of the contract, set to 
expire March 31, 2016, would hurt earnings for the next two 
years. 
    Over the next two days, AmEx's stock plummeted, losing $8 
per share to close at $77.53, according to the lawsuit. The 
decline wiped out close to $9 billion of market value. 
    Representatives for American Express did not immediately 
respond to requests for comment. 
    Costco, which sells everything from jewelry to fresh produce 
at its cavernous members-only stores, had an exclusive 
co-branding arrangement with AmEx since 1999 for the store's 
U.S. business. 
    According to the lawsuit, AmEx did not disclose the revenues 
and loan volume generated through the agreement with Costco 
until February when the company announced it was ending its 
arrangement with the retailer.  
    The lawsuit said that by 2014, the Costco business had in 
fact generated 8 percent of the company's revenues and 20 
percent of its outstanding loans. 
    The lawsuit said that by October, unbeknownst to investors, 
AmEx and Costco had begun discussing renewing the U.S. 
agreement. AmEx subsequently on Feb. 12 announced the end of 
that business. 
    The complaint said that by concealing the value of Costco's 
relationship and its financial prospects, AmEx overstated the 
continuing revenue growth for its U.S. card services segment. 
    The lawsuit seeks class action status on behalf of investors 
who bought its stock between Oct. 16 and Feb. 11. 
    The case is Plumbers and Steamfitters Local 137 Pension Fund 
v. American Express Company, U.S. District Court, Southern 
District of New York, No. 15-05999. 
 
 (Reporting by Nate Raymond in New York; Editing by Ken Wills) 
 ((Nate.Raymond@thomsonreuters.com; Twitter @nateraymond; 
+1-646-223-6752; Reuters Messaging: 
nate.raymond.thomsonreuters.com@reuters.net)) 
 
Keywords: AMERICAN EXPRESS LAWSUIT/
© Stockopedia 2021, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.