On the Beach issues profit warning

In a trading update issued on Friday (9 August), the OTA said the group anticipated delivering full-year performance “below the board’s expectations”.

On the Beach said its flexible model built on dynamic rather than currency-hedged pricing meant it was more susceptible to the impact of currency fluctuations and aggressive pricing by competitors.

“With the increased likelihood of a no-deal Brexit, sterling has significantly devalued against the euro since the beginning of May and this accelerated at the end of July, continuing into August,” the note read.

“While the group has seen a strengthening of demand in H2, this weakening of sterling leads to a significant increase in On the Beach prices versus full-risk competitors with currency hedges.

“As On the Beach remains focused on profitable growth, these relative price increases make it difficult for the group to gain share of market while maintaining margins. As a result, the group anticipates delivering a full-year performance below the board’s expectations.

Chief executive Simon Cooper added: “In what is a difficult general economic climate, we remain confident in the resilience and flexibility of our business model, focusing on profitable growth and an ability to capitalise on any structural changes in the market.

“In FY19, we have invested significantly in our infrastructure, talent and technology to ensure we build strong foundations to support our strategic objectives.”