- Impact of cost-of-living crisis on 2023 demand ‘unclear’
- Nearly £25 million wiped of company’s valuation
- CEO and founder Cooper to stand down within a year
Online package holidays in the sun seller On the Beach (OTB) raised concerns about the impact the cost-of-living crisis might have on travel for Brits in 2023, undermining the ongoing Covid recovery of the company.
On the Beach reported that both profits and revenues had improved year-on-year amid a bounce back in travel demand but also failed to match levels seen in 2019, before the pandemic.
Revenues, adjusted for Covid cancellations, surged from £30.5 million in 2021 to £144.3 million in the year to 30 September 2022, with pre-tax profit of £14.1 million up from the previous year’s £18.4 million loss.
This fell shy of 2019’s £147.5 million revenue and £34.5 million pre-tax profit.
WHAT HIT THE SHARE PRICE
The key for investors is now 2023, and there will be nerves jangling as the company effectively admitted that it has little idea how hard holidays demand will be hit as the price of food, fuel, and other essentials soar.
‘It is unclear how the cost-of-living crisis will impact consumer behaviour in 2023,’ the company said, although it believes that hard decisions made over the past year ‘position the group favourably for another year of growth in 2023.’
On the Beach shares fell nearly 13% in early trading to 109p, wiping nearly £25 million off the company’s market value to £160 million.
Interestingly, On the Beach said that it had begun the 2023 financial year with a ‘healthier overall forward order book’ than the equivalent period just before the pandemic struck in 2020.
NEW ROLE FOR FOUNDER & CEO
On the Beach will also have to contend with the stepping aside of founder and chief executive Simon Cooper. He founded On the Beach in 2004 and played a pivotal role in growing it into one of the UK’s leading online beach holiday retailers. He also owns about 5.6% of the company’s shares.
Cooper will not be leaving entirely though. He plans to stand aside within the next year but will stay on the board as a non-executive director and will continue to be actively involved in the business.
Cooper will be replaced by chief financial officer Shaun Morton, CFO since 2020 and crucial in steering On the Beach through the Covid shutdown.
The switchover will happen as soon as an appropriate replacement CFO can be appointed.
