Thomas Cook shares (LON:TCG) plunged on Tuesday after the travel company issued its second profit warning in two months.
Shares crashed after the company said it anticipates profits to be £30 million lower than expected.
Thomas Cook said it was still feeling the effects of the prolonged heatwave over the summer, with more customers opting for staycations as opposed to travelling abroad during the usually lucrative period.
Moreover, warmer winter temperatures had thus far also deterred many customers from booking package holidays, hitting Thomas Cooks profits.
Nevertheless, the company’s airline, provided some cause for optimism, reporting record growth of £35 million.
“2018 was a disappointing year for Thomas Cook, despite achieving some important milestones in our strategy for transforming the business,” commented group chief executive Peter Fankhauser.
“After a good start to the year, we experienced a larger-than-anticipated decline in gross margin following the prolonged period of hot weather in our key summer trading period,” he continued.
“Our final result is expected to be around £30 million lower than previously guided, due to a number of legacy and non-recurring charges to underlying EBIT. Within this, profit in our tour operating business fell £88 million as the sustained heatwave restricted our ability to achieve the planned margins in the last quarter.”
“The UK was particularly hard hit with very high levels of promotional activity coming on top of an already competitive market for holidays to Spain.”
“Despite the impact of the hot summer, our northern European tour operator achieved anear-record performance, albeit lower than that expected at the end of May. Meanwhile, our Group Airline delivered strong growth in customers and profit, benefiting from increasing capacity in a turbulent European aviation sec,” he added.
Shares in Thomas Cook are currently -23.21% as of 14:04AM (GMT), on the back of the profit warning.