ISSAQUAH, Wash. -- American Express is ending next year a 16-year-old agreement with Costco Wholesale that calls for the exclusive use of its cards at the retailer's U.S. stores.
The charge card company says it hasn't been able to agree with Costco on renewal terms that make economic sense for American Express. The deal lasts until March 31, 2016.
American Express said Thursday morning that it charges Costco a significantly lower rate than the overall average it imposes on other retailers as part of the agreement.
“Taking a very disciplined approach, we began discussions on a possible renewal with Costco well in advance of the contract expiration," said Kenneth I. Chenault, Chairman and Chief Executive Officer of American Express. "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."
A company spokeswoman says a similar agreement involving Costco's Canadian stores ended last year.
A Costco Wholesale Corp. representative did not immediately return a call from The Associated Press seeking comment.
Shares of American Express Co. dropped more than 6-percent Thursday, its largest one-day percentage decline since 2011, according to the Wall Street Journal.
The current agreements with Costco are set to end on March 31, 2016. Until that time, all American Express credit cards will be accepted at Costco warehouse stores in the U.S and on Costco.com. All co-branded cards from American Express and Costco can be used any place American Express cards are accepted through March 31, 2016.