DOWNTURN HITS FLIGHT CENTRE PROFIT

Written on the 26 June 2015

DOWNTURN HITS FLIGHT CENTRE PROFIT SAVVY holidaymakers turning to online competitors have slugged Flight Centre (ASX:FLT) with the travel retailer downgrading its profit guidance.

Underlying profit before tax is forecast to be between $355 million and $365 million in FY15, down from its earlier target of $360 million to $390 million.

Earnings are also expected to fall short compared to the previous period, despite reporting a record total transaction value across Flight Centre's 10 global businesses.

Consultant discounting in the first half to stimulate demand and compete with bargain market pricing has contributed to the decline.

The company has also faced higher costs as a result of increased wages, network expansion, repositioned marketing strategy and sluggish sales growth in the industry overall.

Flight Centre managing director Graham Turner says the growth in the retailer's international division won't be enough to offset the domestic decline.

"Corporate travel results have generally been reasonable, although the downturn in the resources sector has again affected performance in Western Australia and the Australian corporate travel market as a whole," Turner says.

"While our mainstream leisure growth has been subdued this year, the investments we are making in the marketing and customer intelligence areas will help us generate stronger returns on our marketing spend and increase our market-share in the future."

Leisure sales in Australia slowed in the lead up to the Federal Budget in May last year, with the market stabilising in the second half of FY15.

Turner says the company hasn't kept pace with the recovery, as demonstrated by modest growth during the traditional "uplift" months of May and June.

"On a positive note for the longer term, airline competition remains healthy in Australia, with international capacity up again this year and about 50 airlines servicing outbound routes," he says.

"This competition looks set to continue, with Airbus recently predicting in its Global Market Forecast that the passenger aircraft fleet serving the Australia South Pacific region will almost double by 2033.

"This supports our belief that the next 20 years will represent a Golden Era of Travel, as customers will have more choice, better in-flight experiences and continued access to highly affordable fares."

Earnings in the US are set to increase by 50 per cent this year, while the UK is on track to reach GBP$1 billion in transactions.

Flight Centre will continue to revitalise the brand in Australia, including the roll out of enhanced stores for Escape Travel and Travel Money.

Latest News

2017 MELBOURNE TOP COMPANIES 41-50

THIS WEEK Business News Australia will reveal the 2017 Melbourne Top 50 Companies, featuring all the movers and sh...

FORMER MFS EXECUTIVES HIT WITH DISQUALIFICATIONS AND MASSIVE FINES FOR MISAPPROPRIATING FUNDS

FIVE key players involved in an investment company that collapsed in 2008 owing $2.5 billion have been ordered to ...

SURFSTITCH BATTLING FOR SURVIVAL

QUEENSLAND based online retailer SurfStitch Group has gone into a voluntary trading halt for three months after it wa...

STARTUP SUCCESS BOILS DOWN TO PERSONALITY, SAYS EXPERT

THOSE who own startups will know that there are many essential qualities of a good entrepreneur; their tenacity, fina...

Related News

STARTUP SUCCESS BOILS DOWN TO PERSONALITY, SAYS EXPERT

THOSE who own startups will know that there are many essential qualities of a good entrepreneur; their tenacity, fina...

SLATER AND GORDON TAKES SPOTLESS TO COURT

SPOTLESS Group (ASX: SPO) has been hit by a class action launched by Slater and Gordon (ASX: SGH) in the Federal C...

TOPSHOP GOES INTO ADMINISTRATION AMID VOLATILE RETAIL MARKET

TOPSHOP has become the latest in a string of retailers blasted by the volatile retail market, as the iconic fashio...

SIGMA'S SHARE PRICE TAKES A BATTERING AS IT LAUNCHES LEGAL ACTION OVER SUPPLY DEAL

SIGMA Healthcare (ASX: SIG) has taken the MyChemist and Chemist Warehouse chains to court to demand they continue to ...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter