Thomas Cook nosedives after warning on profits
Wednesday 13 July 2011
More than one-quarter was wiped off Thomas Cook's market capitalisation yesterday after the travel company blamed weak consumer spending in Britain and the unrest in the Middle East and North Africa for a dire profits warning.
Its trading woes led Europe's second-biggest tour operator to kick off a strategic review of its UK business and warn that it expects group annual operating profit to come in at £320m this year. This compares with City analysts' forecasts of about £380m for 2010-11 and last year's actual £362m.
Nick Batram, an analyst at Peel Hunt, said: "It is not the downgrade but the scale of the miss that is the surprise. This raises questions about just how flexible the business model is, or whether management just called it badly wrong."
Thomas Cook said the impact of the political unrest in the Arab world – which has particularly hit summer bookings to Egypt, Morocco and Tunisia from France – will be "substantially higher" than expected.
In the UK, the group said the continued "difficult trading conditions", driven by the squeeze on household budgets, means it is "now appropriate that we revisit the effectiveness of our UK business model". Its new UK management team has started a "fundamental and operational review", which analysts expect will see the group close some of its 750 high street branches in the UK.
While Thomas Cook said its summer-holiday programmes are "well sold" with average prices up and fewer holidays left to sell in most markets, in the UK it is having to discount to shift some holidays, which is hitting its margins. But Thomas Cook said its Central Europe, Northern Europe and Airlines Germany operations "continue to perform well", despite the impact of North Africa. Shares in Thomas Cook fell 34.9p, or 28 per cent, to 87.9p, valuing the company at £754m.
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 3 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 4 April Fools' Day 2015: The best hoax news stories from around the internet
- 5 Gamers confess the worst things they've done in The Sims
University of Cambridge: Remains of 1,300 scholars are found under building
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...