Thomas Cook issues ‘hot weather’ profit warning
This summer’s heat wave across Europe has led Thomas Cook to downgrade its annual profit forecasts.
The operator said the hot weather had hit summer demand, describing trading in June and July as ‘tough’, adding the slowdown in UK customer bookings extended into August leading to ‘higher than normal levels of promotional activity’.
"This has exacerbated pressure on margins, on top of an already competitive market for Spanish holidays, as previously highlighted," the operator said.
Underlying operating profits for the year to September are now expected to come in at £280m. Previous guidance was £323m.
The announcement saw Thomas Cook shares fall almost 24% when trading opened this morning. TUI was the biggest faller on the FTSE 100, down 3%.
Full-year results will be published on November 29.
Chief executive Peter Fankhauser said: "Summer 2018 has seen a return to popularity of destinations such as Turkey and Tunisia.
"However, it has also been marked by a prolonged period of hot weather across Europe. This meant many customers spent June and July enjoying the sunshine at home and put off booking their holidays abroad, leading to even tougher competition and higher than usual levels of discounting in the ‘lates’ market of August and September.
"Our recent trading performance is clearly disappointing.
"However, despite the recent challenges, we continue to make good strategic progress which positions us well to drive further performance improvement; this includes the launch of our Expedia alliance in the UK and Scandinavia, signing our first own-brand hotel in China and lining up a pipeline of 10 new Cook’s Clubs in some of our key destinations for summer 2019."
Lisa
Lisa joined Travel Weekly nearly 25 years ago as technology reporter and then sailed around the world for a couple of years as cruise correspondent, before becoming deputy editor. Now freelance, Lisa writes for various print and web publications, edits Corporate Traveller’s client magazine, Gateway, and works on the acclaimed Remembering Wildlife series of photography books, which raise awareness of nature’s most at-risk species and helps to fund their protection.
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