Amex co-brand may not be a consistent earner for David Jones

The terms of the joint venture agreement between David Jones and American Express over their credit card co-brand receive some analysis in the Chanticleer column in the Financial Review, and which suggest that DJ's earnings from its cards business will become more volatile from 2013.

The AFR reports that the five year agreement between Amex and DJs, reached in 2008, provides for a minimum growth in earnings before interest and tax from the cards business for the retailer of 7.5 per cent a year for the first five years on top of an earn out to DJs of $40 million from Amex.

The uplift to earnings from the cards business, and which is equal to 16 per cent of David Jones group EBIT at present, will then be tied to the actual profits from the credit card side of the business.