- Value market challenging
- High street market competitive for B2B sales
- Overheads increased by £1.3 million
Shares in On The Beach (OTB) fell as much as 9% to 151p in morning trading as the online package holiday provider’s first-half results showed it is feeling the pressure from the cost-of-living crisis and competition on the UK High Street.
It was not all ‘doom and gloom’ however, as the beach holiday retailer reported an 11% increase in group revenue to £80.8 million for the six months to 31 March 2024.
Today’s share price performance was in stark contrast to yesterday’s rally which saw On The Beach shares close (13 May) at the 168p mark ahead of reporting its first half results.
Shares in the company have also rallied 18% over the past year.
(Total Transaction Value) TTV for the period was £597.8 million, up 22% year-on-year, while total cash increased by £32 million year-on-year.
On The Beach also rewarded shareholders with an interim dividend of 0.9p per share, its first distribution since February 2020 reflecting management’s continued confidence in the company’s prospects.
PREMIUM MARKET CONTINUES TO GROW
CEO Shaun Morton told Shares that the premium market continues to grow strongly ‘with customers booking 4-star and 5-star holiday packages to Turkey, Greece and Portugal’.
The company also said its long-haul market continues to outperform as it continues to add new destinations.
The beach holiday specialist also prides itself on an enhanced customer experience and offers its customers benefits like, fast-track through airport security, access to premium airport lounges and free mobile data.
RYANAIR PARTNERSHIP
On The Beach’s partnership with Michael O’ Leary’s low-budget airline Ryanair (RYA) is also well underway.
Back in February, the beach holiday retailer signed a long-term distribution agreement with Ryanair which allows it to freely access Ryanair’s seat supply with ‘increased price transparency’.
On The Beach will still be able to offer its customers flexible payment plans, perks and ATOL protection under the terms of the agreement.
Analysts at Peel Hunt (PEEL:AIM) were positive overall about the latest set of figures but expressed caution regarding the take up of the beach holiday retailer’s value offering.
‘Trading is strong and operating leverage is clearly coming through. The B2B channel is to be restructured to improve efficiency. The Ryanair partnership creates new opportunities,’ said the broker.
‘However, there is clearly some pressure on the consumer of value holidays and management’s guidance that the business is trading in line with consensus is clearly based on line of sight to the year-end. With that in mind we have lowered our full year 2022 estimated adjusted (earnings before interest taxation depreciation and amortisation) forecast to the mid-point range.’
