Tag Archives: Thomas Cook

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‘Toughest trading in 40 years’ leaves Co-op 12% down

By Ian Taylor  |  Aug 26, 2011 08:00AM GMT

'Toughest trading in 40 years' leaves Co-op 12% down

The Co-operative Group reported the worst retail trading conditions “in 40 years” as it recorded a 12% drop in underlying profits for the first half of this year.

Co-op group chief executive Peter Marks said: “We do not see signs of any real improvement in the economy and are planning accordingly.”

The group reported an underlying profit of £230 million for the six months. The business division that includes The Co-operative Travel contributed an underlying operating profit of £70 million.

However, the group gave no figures on the performance of its travel division which will merge with Thomas Cook and the Midlands Co-operative over the next month followingCompetition Commission clearance.

The Co-operative Travel made an operating profit of just £100,000 last year. It is part of a business division that includes the Co-operative Pharmacy, Funeralcare, Legal Services, car dealerships and clothing.

In a statement, the group said: “The UK and the world economy remain in a highly fragile state. Our customers are feeling the squeeze and, inevitably, we are seeing an impact on sales. The economic environment is particularly challenging for those businesses that rely on ever-tightening discretionary spend.”

Marks said: “We warned that the downturn was biting deeper than anyone had expected and predicted challenging trading conditions would continue into 2012. This has clearly proved to be the case. Indeed, it is the worst I have seen in 40 years of retailing.”

The deal with Thomas Cook guarantees the Co-operative Group a minimum dividend from the travel retail business of £10 million a year for the next four years, with a subsequent option for either partner to buy out the other.

Union ‘not consulted’ about Cook Co-op merger

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Union ‘not consulted’ about Cook Co-op merger

Aug 19, 2011 07:00AM GMT

The trade union representing staff at the Co-operative Group has expressed dismay at the company’s failure to consult it ahead of receiving Competition Commission clearance for the travel retail merger with Thomas Cook.

The Commission gave a final go-head to the deal to merge The Co-operative Travel, Midlands Co-operative and Thomas Cook retail division on Tuesday, after announcing provisional clearance on July 21.

The deal will see the creation of a new joint venture with more than 1,200 shops and in excess of 9,000 staff. It will be run and majority-owned by Thomas Cook, with most of the 9,000 staff from Cook and the Co-ops required to transfer employment.

Shop workers’ union USDAW said it had no warning that the announcement was imminent.

USDAW national officer Sharon Ainsworth said: “We have concerns about whether stores will have to shut and we are not happy about the fact we don’t know more.

“The Co-op did not consult us and that is unusual. I deal with the company day to day and the unions were not told.”

The Co-operative Travel head office employees at Burslem, Stoke-on-Trent, and in Manchester will face a choice between a transfer within the Co-op, a move to Thomas Cook headquarters in Peterborough or redundancy.

Ainsworth said: “Everything has been on hold since the merger was referred to the Competition Commission. There have been no talks. We had expected a decision in October, so the announcement was quite a shock.

She said the Co-operative Group had now agreed to a meeting with union officials.

Both the Co-operative Group and Thomas Cook have declined to give details of the joint venture and staff-transfer process ahead of consulting staff, but the process is likely to begin within six weeks.

Thomas Cook staff are represented by a separate union – the transport union TSSA.

Thomas Cook denies plans to close ‘hundreds of shops’

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Thomas Cook denies plans to close ‘hundreds of shops’

By Ian Taylor  |  Aug 15, 2011 08:00AM GMT

Thomas Cook has dismissed a weekend report that it is considering “plans to close hundreds of shops”.

A Thomas Cook spokeswoman said: “There is no substance at all to the story” – which appeared in the Sunday Times.

The group is poised to merge its UK retail outlets with The Co-operative Travel and Midlands Co-operative to create a chain of more than 1,200 travel agencies and has consistently said no more than about 75 shops will close as a result. The deal could be signed off by the Competition Commission any time between now and October.

The Sunday Times claimed Thomas Cook “is expected to rethink the number of shops it needs”. However, the spokeswoman told Travel Weekly: “We have said we will close 75 when the deal goes through.” She added: “We have said the strategic review will look at the multi-channel [distribution] business.”

Thomas Cook announced a “fundamental review” of its UK business following a profits warning in July. In a statement in early August – on the day Manny Fontenla-Novoa stepped down as chief executive – the group identified “the efficiency of our retail network” and “the size and structure of the airline” as among the areas the review would examine.

The spokeswoman confirmed the review is looking at the airline, including the size of the fleet, but said: “No decisions have been taken.”

The merger with the Co-ops has been touted as a means to increase both in-house distribution and margins, since more high-margin package holidays are sold through shops than other channels. However, industry commentators have questioned the wisdom of acquiring such a sizeable chain of stores during a consumer downturn.

Members of the Thomas Cook board – led by chairman Michael Beckett, acting chief executive Sam Weihagen and chief financial officer Paul Hollingworth – sought to demonstrate confidence in the group last week by purchasing more than 775,000 shares in the company.

The share price fluctuated wildly through last week along with the market, losing 16% on Monday, regaining 17% on Tuesday and climbing 6% on Friday to leave shares trading at 55.6p at the week’s end – giving Thomas Cook a market capitalisation of just under £487 million. Further fluctuations are expected.