Reputations can take decades to build…and only minutes to throw away. I thought of this last week when I read that American Express (AXP) was gutting its travel services, laying off more than 5,000 employees—or roughly 9 percent of its workforce—most of whom worked in travel. Remember, Amex is the card for the global elite—executives and high-net worth consumers. There is a certain cachet to pulling an Amex card out of your wallet—particularly a Centurion Card (also known as “the Black Card”). In the company’s own words, Amex targets “super-affluent high net worth individuals on a continual quest for the best and most exclusive. They own companies and frequently travel; they define success.”

High-end travel services were part of what gave Amex its prestige. So pulling back on the perks that give Amex its aura of exclusivity might seem risky. Though as Amex CEO Kenneth Chenault noted in the post-earnings conference call, the economics of corporate travel are changing.

In a time of threadbare budgets and global austerity, full-service travel agency may seem a bit frivolous. And cost-conscious businesses are finding ways to reduce travel costs, both by traveling less (Skype conference call anyone?) and by using lower-frill airlines and hotels. I have no hard data on this, and I don’t know if it is even tracked. But I’ve observed on recent flights that Business Class has been noticeably devoid of suit-wearing gentlemen in their 40s and 50s—what we might think of as “the business crowd.” There are a lot more grey flannel suits in Coach Class these days. Again, no hard data here; just an observation.

So Amex’s decision to scale back its travel services may simply be an acknowledgement of changing times. But Amex has made some other moves recently that would seem to be chipping away at its high-end image. For example, the company partnered with Wal-Mart (WMT)—yes, Wal-Mart, in launching a reloadable pre-paid card targeted at lower-income consumers who often have no access to the traditional banking system.

Now, I have nothing against Wal-Mart. It’s a fantastic company. I own shares for myself and clients, and I myself have saved thousands of dollars over the years buying my sundries there. But I can’t escape the thought that Amex is going slumming.

Amex should tread carefully here. What separates Amex from the Visa (V) and MasterCard (MA) cards used by the lumpenproletariat masses is the image of exclusivity. Amex doesn’t sell financial services; you can get those from any bank down the street. No, Amex sells image.

And Wal-Mart prepaid cards might not quite be the best way to sell that image. Just sayin.’

Amex can never compete with MasterCard and Visa in the mass market, but it doesn’t need to. The company has roughly an 8% market share based on cards in circulation, according to Card Hub. Yet it has 23.8% of market share by purchase volume, barely 3% below MasterCard. There are a lot fewer Amex users, but collectively they spend a lot more than the average credit card user.

Unlike MasterCard and Visa—which are payment networks and not banks—Amex is an actual financial institution with all of the assorted risks this entails. Not surprisingly, Amex trades at a substantial discount to its payment network rivals—a forward P/E of 12 vs. 19 and 20 for Visa and MasterCard, respectively. But given the higher credit quality of its borrowers, it trades at a premium to mass-market card issuers like Capital One (COF), which trades for just 8 times expected earnings.

Based on the numbers, Amex is probably priced “about right,” neither expensive nor cheap. But I am not a buyer at current prices. Amex seems like a company struggling to find its way in a changing market. A marketer of exclusivity has no business offering prepaid card at Wal-Mart.

Disclosures: Sizemore Capital is long WMT.

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