Flight Centre has shaken off the retail gloom and will for the first time make money in all 10 of its markets, even the United States where it hasn’t made a cent in 12 years, leading to a forecast record pre-tax profit of between $243m and $247m for the retail giant in the financial year ending June 30. Managing Director Graham Turner says the result will be 20% better than the previous record, set in 2007/08 and shows that travel has become an essential part of Australian life rather than discretionary spend.
The Flight Centre news came just two days after department store owner David Jones downgraded its profit estimate and was negative about the year ahead. Travel is in a different place, at least when it comes to Flight Centre, the clear market leader in Australia.
“The company has not experienced the soft demand that retailers in some other sectors have reported. This partly a reflection of the product we sell. A holiday is not really considered discretionary spending – taking time out for one or two extended breaks in Australian or overseas during a long working year is an annual ritual.
“In the current climate leisure customers are finding compelling reasons to take off overseas with international airfares remaining highly affordable and the strong dollar delivering a secondary benefit.
“Results have generally improved in both the corporate and leisure travel sectors with the strongest growth recorded in corporate. Leisure customers have been more discerning but continued to travel in solid numbers. Domestic leisure tourism has not yet rebounded but this has been offset by solid growth in international ticket numbers.”