Manchester-based online holiday retailer On the Beach Group plc said on Wednesday its profit before tax for the year to September 30 fell 26% to £19.4 million reflecting the failure of Thomas Cook Group plc.
“There was a one-off exceptional cost associated with helping customers to organise alternative travel arrangements and lost margin on cancelled bookings …” said On the Beach.
“This totalled £25.6m and is stated net of a chargeback claim of £18.5m.”
On The Beach full-year adjusted profit before tax, excluding one-off expenses, rose 3% to £34.6 million.
Full-year revenue rose 35% to £140.4 million.
On the Beach Group CEO Simon Cooper said: “In what has been a difficult general economic climate with the prolonged uncertainty regarding Brexit and the related currency impacts, I am pleased with the group’s performance with significant progress made against our strategic objectives while delivering a 3% increase in group adjusted profit before tax, in line with market expectations.
“Following the failure of Thomas Cook Group plc (TCG), all teams across our business responded exceptionally to ensure that customers were either re-booked or refunded in the shortest possible time while maintaining high quality customer care.
“We have made significant progress against our strategic objectives in the year with the launch of Classic Package Holidays, the expansion of our long haul offering and the International segment delivering strong H2 revenue growth and a full year revenue after marketing break-even performance for the first time.
“The first quarter of our financial year (calendar Q4) has historically been the quietest trading period for the group.
“The failure of TCG has led to a material shift in market dynamics as it had a 20% share of beach holiday passengers and approximately 20% of the seat capacity to beach holiday destinations.
“This has created a significant short-term lack of seat capacity as well as an unprecedented opportunity in the medium term to gain share.
“Search demand has therefore been strong throughout the period following the failure albeit the loss of seat capacity has led to a supply / demand imbalance with a significant increase in flight pricing, particularly for winter 19/20 departures and for travel to Eastern Mediterranean destinations.
“The board strongly believes the correct course of action to ensure that On the Beach is best-positioned to capture market share, is to focus on price competitiveness and to increase the visibility of all of the group’s brands, with the expectation that seat supply will normalise during FY20.
“Whilst the consumer environment will continue to be challenging, we remain confident in the ability of our resilient and flexible business model to significantly increase our market share in the medium term.”