Thomas Cook has announced plans to close 200 stores over the next two years in an attempt to shore up its struggling UK business.
The travel agent already said it would be likely to close 75 shops after merging with the Co-op’s high-street travel business, but it has now announced the closure of a further 125 stores. It was left with more than 1,300 travel shops after the merger.
Thomas Cook revealed pre-tax losses of £398m for the year to the end of September, compared to the £42m profit it registered last year. Holidaymakers have been put off travelling to Egypt and Tunisia by the Arab Spring, contributing to poor trading in the UK.
The group also wrote down the value of its Canadian and UK businesses.
Shares in the travel agent plummeted last month when it delayed the release of its results and said it had gone back to lenders to request an additional £100m lifeline. Fears over its survival caused shares to drop 75 per cent in one day, but the 170-year old firm which sells more than 22 million holidays a year in the UK, says it is now on a sound financial footing.
Thomas Cook said the first quarter of its new financial year had started slowly, but added it was encouraged by customers’ response to its recent summer promotion despite there being an initial “adverse impact” on bookings after last month’s announcement.
Bookings for the summer from UK customers were eight per cent ahead of last year, although capacity has been cut by eight per cent, while bookings for the current winter season are down by 11 per cent.
The travel agent’s interim chief executive Sam Weihagen said: “Customers have been very supportive in recent weeks and are continuing to book with Thomas Cook. Bookings outside the UK were broadly unaffected by news of our refinancing and in the UK bookings have recovered well. For over 170 years Thomas Cook has provided customers with fantastic holiday experiences and we will continue to do so.”
Weihagen, who said the 200 stores to be closed were not profitable, added: “As the increase in e-commerce continues, we will have to review the number of shops we have in our estate. As long as the shops are profitable, we will keep them.”
When asked if any other stores were unprofitable, he said: “For the time being, no. I think there will always be a need for shops. You can always discuss how many.”