Jul 31, 2018
Spanish holidays weigh on Thomas Cook profits
Holiday group Thomas Cook said on Tuesday it expected profits for the full year to be at the lower end of market expectations, as the popularity of budget Spanish holidays pressed on margins. In its results for the three months to June 30, Thomas Cook reported revenue growth of 10 per cent to £2.5bn and an 11 per cent rise in summer bookings compared to last year, but said gross profit was down 3 per cent to £443m. Higher summer bookings were fuelled by strong growth and increased capacity of the group's airline, it said, which had helped offset a slowdown in holiday bookings in recent weeks, as customers in Europe delayed going abroad to enjoy warm temperatures at home. The group said it remained in a "Competitive environment", particularly in the UK where the growth in popularity of higher-margin destinations like Turkey and Egypt had not fully offset the "Continued pressure on margins to Spanish holidays." Gross margins for the quarter declined by 240 basis points compared to the same period last year, said the group, as Brits continued to book trips to Spanish islands "Where we continue to see aggressive pricing from the competition and bed cost inflation from hoteliers." The group said the rise in revenue was driven by higher demand for holidays to Turkey and north Africa over the quarter and that overall volumes remained "Significantly ahead of last year."
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