Over-50s’ holiday favourite Saga blames Brexit for fall in bookings
The company added that its insurance business remains on track, but shares plunged.
Saga has added its name to the list of travel companies to complain that the political uncertainty around Brexit has sent bookings plummeting.
Bosses at the over-50s-focused firm said cash taken from bookings has fallen 4% for the full year to June 15 compared with the same period a year ago.
They added that profits from the division will also be affected due to high levels of discounting in the sector.
Investors were unimpressed, with shares dropping 13.1% to 32.7p in early trading on Wednesday.
Rival travel operators Thomas Cook and TUI have both issued profit warnings this year, blaming, in part, British holidaymakers who had put off travel plans over fears of a no-deal Brexit, especially when the deadline for leaving was at the end of March.
Saga said its cruise business has been more resilient with bookings “in line” with targets.
The company added: “Forward bookings for the 2020/21 year for the two new ships are broadly on track, with a significant step up in marketing activities planned for the next three months to coincide with the launch of the Spirit of Discovery.”
But the sale of its Saga Pearl II ship means operating losses for the division will be around £3 million.
Outgoing chief executive, Lance Batchelor, who leaves next year, said: “We are resolutely focused on the execution of our new strategy and have a clear set of priorities. Against challenging headwinds in both travel and insurance, we see early signs of progress in stabilising our Retail Broking business and forward bookings for the Cruise business have been resilient.”
His comments come as shareholders were welcomed to the company’s annual general meeting in Folkestone on Wednesday.
In Saga’s insurance division, business fared better, with bosses revealing nearly half of all new business has been customers taking out home and car insurance on three-year fixed price policies.
Gross margins for policies, after marketing costs, are around £71 to £74 per policy, the company added.
Russ Mould, investment director at AJ Bell, said: “Saga is having a hard job digging itself out of a massive hole.
“Having issued several profit warnings in the past few years, changed its insurance strategy, and announced plans to part ways with its chief executive, the business has come back with a patchy trading update.
“In its defence, the turnaround plan is still fairly new and it will take time to see if the strategy works.
“A warning from its travel business isn’t helping sentiment towards the business – already at rock bottom, judging by how its share price is performing.”