Flight Centre Travel Group Ltd.’s Challenging trading cycle but improved productivity

Challenging trading cycle but improved productivity: Flight Centre Travel Group Ltd.’s (ASX: FLT) stock has fallen 17.3% in last six months (as at March 17, 2017) and slipped 0.79% on March 20, 2017 at the back of softness in market sentiments. Primarily, some recent media reports indicated that the group may need to close about 135 stores in order to rebound to boom witnessed in 2012, on the basis of an analysis note released by Macquarie Group. FLT earlier reported that its first half (1H) sales and profit before tax (PBT) have been in line with its targeted range. However, the result saw weakness owing to challenging global trading cycle with widespread airfare discounting, economic uncertainty and exchange rate volatility. On the other hand, FLT achieved its goal of increasing sales per person which led to improved productivity. Further, 1H total transaction value (TTV) topped $5billion for the first time at the back of strong ticket sales. This was in fact, a record 1H TTV for the 20th time in 21 years. FLT reported that the underlying PBT was $113.2million, which was just above the mid-point of the targeted range. At the same time, the 1H capital expenditure was $66million against FY16 expenditure of $58million given the investments in systems and shop enhancements, and head office relocations.


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