Thomas Cook closing shops that ‘lost money for years’

Thomas Cook closing shops that ‘lost money for years’

Shops up for closure at Thomas Cook had been losing money “for years”, the head of the group’s UK operation said on Friday.

Thomas Cook UK mainstream managing director Ian Ailles told an e-tid briefing: “As a retailer you should be constantly managing your estate. Perhaps we got out of the habit.”

The company told staff this week it would close 115 Thomas Cook, Going Places and Co-operative shops from April as part of plans to shut 200 over two years.

Ailles said: “A lot of these shops have been losing money for years.”

He added: “You constantly need to tend a business and prune it. Perhaps we weren’t doing that.”

Ailles was critical of a discount culture he said had dominated the UK mainstream business and left it with no profit this year. He said: “We chased too much volume.”

There was a lack of yield management and no coherent pricing strategy, he said. “We were doing different things online and in shops. Customers were seeing different prices and seeing prices change every hour.

“We re-priced on the basis of two hours’ trading. It spooks customers if they go on the internet and see different prices.”

Ailles added: “Perhaps we didn’t have the right incentives in place for people in the shops. We had 200 incentives a month and that is a lot to deal with.

“We had people in shops thinking they were doing a great job within the parameters they had been set, but it wasn’t a great job for Thomas Cook as a group. People in the shops are not paid to manage yield.”

As an example, he said: “We had flights for 2011 sold out by the end of 2010. They must have been significantly underpriced.”

Ailles has headed Thomas Cook’s mainstream UK operation since rejoining the company at the start of this year and undertook a review of the UK business in the summer.

He said: “Mainstream made nothing. The profit out of the UK was £19 million. It all came from the agency side of the independent businesses.”


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