On the 13th of March, British travel firm Thomas Cook informed that it aimed to improve its profits by around £350 billion by 2015 through its turnaround strategy. The 171-year-old UK tour operator plans to reduce the number of its stores, dispose non-core businesses and concentrate on online sales as it is trying to stand on its feet.
Expansion of cost cuts
As it has been underlined by Thomas Cook Group Plc, the company decided to update it turnaround strategy. The UK's oldest tour operator, which achieved around £60 million in savings through cost cuts back in 2012, plans to gather approximately £150 million from planned disposals of its non-core businesses. Thomas Cook Group Plc informed that it added approximately £50 million to the actual saving plans so that it would see the improvement of as much as £350 million by 2015. But it is not the last of its strategy as the company is also to introduce other cost cutting steps. The fact is that Thomas Cook Group Plc has to stay really focused on its turnaround strategy as the company has been struggling due to sharp declines in sales which led to renegotiating terms of bank loans!
However, with its new turnaround strategy, the company is strongly convinced that its UK business will improve its profits by around £350 billion by 2015. The plan is to witness sales growth of 3.5 percent a year by 2015. In addition, the operating profit margin is expected to be more than 5 percent in the UK business by the year 2015 as well, according to estimates.
It is worth reminding that the company has already begun a required 90-day consultation period to slash as many as 2,500 positions - the downsizing which was announced not so long time ago. All these recent moves, including downsizing and consolidating its airline operations are aimed at achieving savings and getting the company out of a hole. It seems that Thomas Cook Group Plc believes that a recipe for success is quite uncomplicated as it is simplifying its businesses.
Green & Turnaround Plan
And it is not surprising that since her nomination in May 2012, Harriet Green has been focused on the turnaround plan which is to change the fortune of Thomas Cook Group Plc. According to a statement released on the 13th of March, the turnaround strategy has already started bearing fruits.
Harriet Green just tries to simplify the business and shift the main focus on online sales. But as it has been underlined many times, Thomas Cook Group Plc will introduce new products and services which are to be hits.
When it comes to the planned disposals, no details are known. However it has been widely speculated that Elegant Resorts, Gold Medal and other assets are to be sold as first. Thomas Cook CEO Harriet Cook underlined: “Having now established our profitable growth strategy, we will review our capital structure, taking into account the opportunity we have to improve cash generation of the group through our profit improvement programme, further working capital improvements and possible non-core asset disposals.” Indeed, in February 2013, the company informed that it reduced first-quarter operating profits, underscoring strong summer booking.