Holiday firm’s profits plunge

Shearings boss Denis Wormwell

Shearings boss Denis Wormwell

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A WIGAN holiday firm has seen its annual profits halve in the space of a year.

Despite a rise in revenues the Shearings Group’s pre-tax earnings slumped from £9.4m to £4.6m.

Shearings, which is a tours and hotels operator, has battled with higher costs and absorbed last year’s VAT hike and sats that new initiatives to grow sales and margins are paying off.

The company is now focusing on cost reductions and sales of higher-margin products to improve its performance this year compared with 2011.

Chief executive Denis Wormwell said: “Throughout last year, our customers encountered some fierce economic headwinds, which undoubtedly affected their willingness and ability to spend.

“Despite this, our brands showed continued resilience, thanks to a combination of further investment in product, a strong focus on value and the enduring appeal of escorted tours and holiday breaks to our target customer group.

“Our strategy of absorbing the majority of short-term cost increases experienced during 2011 ensured we increased customer volumes, while we continued to invest across the business and pay down debt.

“As a result, margins reduced in line with expectations. Further sales initiatives and cost reductions are under way, which we expect will improve the full-year position for 2012.”

Company bosses said higher input costs such as fuel, utilities and food, and its decision to absorb the rise in VAT from 17.5 to 20 per cent rather than pass it on to customers, weighed on its profits for 2011, although pressure on margins eased in the second half of the year.

But despite the drop in profit revenues increased from £187.1m to £193.7m.

Shearings, which is backed by private equity firm 3i, saw continued growth in overall customer numbers to 731,000, invested £4.2m in the business, mainly to upgrade its 50-strong hotels estate, and reduced its net debt by £2m to £15.1m.

The group, which employs 2,800 staff, operates escorted tours and hotels which trade under the Coast and Country and Bay brands.

It has a fleet of 260 coaches and also operates rail and air holidays and ocean and river cruises.

Mr Wormwell said sales initiatives since the start of the year were proving successful, with a four per cent increase in like-for-like bookings.

However, he warned the sales environment would continue to be challenging because of continued consumer uncertainty.