Thomas Cook issued 3 profit warnings this year and has now announced losses of £400 million. It is planning some major restructuring to solve its cash crisis. There will be around 200 store closures with redundancies all over the country. There are 110 stores that will definitely close, although no jobs will close before Christmas. In total it is expected that around 1000 jobs will be lost over the next 2 years.
It was less than a month ago that we reported that Thomas Cook shares plummet on debt Worries and that Thomas Cook was securing more funds from its investors.
The recent merger with Co-op boosted their high street shops to around 1400, and there are now simply too many high street shops in their portfolio.
Share price has crashed by 90% this year. Thomas Cook was trading at a high of 206.8p in 2010 and is currently trading at 14.41p (9am, 14/12/11). You can follow the latest share prices at here: www.google.co.uk/finance?cid=716892.
Thomas Cook sells around 22 million holidays a year in the UK and still controls a huge part of the UK market. Like many other businesses it is selling more of its products and services online via its website. People are still using Thomas Cook to search for and book holidays (22 million is a very healthy number of sales for any business) but rather than go to the shops many people are online.
Thomas Cook Airlines will also be losing 6 of its aircraft. It got a very bad review from Which? this year, placing it below Ryan Air in terms of customer care and service.
Too Many Cheap Holidays Sold
Thomas Cook’s problem has been selling too many cheap holidays, with typical holidays sold including 2 start bed and breakfast deals to the Mediterranean and similar cheap and discount deals.
The suggestion is that for Thomas Cook to really thrive again it needs to start selling higher quality holidays which will have a larger profit margin. Some of the holidays sold may have been making them a loss, once the cost of sales is factored in.
Overall Thomas Cook’s sales are strong and it is hoped that this restructuring will result in a complete turnaround. Thomas Cook is no longer competing with other high street holiday companies, it is competing with the like of Expedia, Last Minute, Travel Supermarket and Virgin Holidays.