The division’s revenue for the year ending on September 30, 2018, was actually up 5% year-on-year to £1.95 billion, but earnings before interest and tax (ebit) fell from a £49 million profit in 2017 to a loss of £7 million this year.
Cook blamed the impact of the summer heatwave in the UK, which led to a weak “lates” booking period when the operator was forced to sell holidays with “deep discounting”, leading to lower margins.
Spain also proved to be a problem for Cook’s UK tour operation due to higher hotel costs and airline overcapacity to the destination. Other factors included complex legacy systems holding back the operator’s “transformation” and “low awareness” of Cook’s own-brand hotels.
But it wasn’t all bad news, with impressive sales growth to both Turkey and Egypt, which were up 70% and 95% year-on-year.
Cook has drawn up a plan to turn its UK business around, but chief executive Peter Fankhauser admits the challenges “remain significant”.
The strategy includes “driving awareness and take-up” of its own branded hotels, as well as increasing the number of dynamically packaged holidays it sells.
Other moves will include the introduction of new automated yield systems and promoting the financial services offered by Thomas Cook Money in its high street agencies to “optimise” store profitability.