Shearings invests in brands, despite tough year

COACH and holidays group Shearings saw a slight fall in turnover and profits in 2009, but said a reduction in overseas holidays, due to the fall in sterling value and general economy, was made up for by a surge in UK short stay breaks.

The Wigan-based group, owned by private equity firm 3i, saw turnover dip 1.8% to £180.4m for the year to the end of December 2009, according to newly filed accounts.

This impacted pre-tax profits which also fell slightly to £922,000 from £948,000 a year earlier.

The group, which employs more than 2,800 staff, said the reduced turnover was a result of a reduction in the sales of overseas holidays, where the fall in the value of sterling significantly increased costs and therefore selling prices to customers.

This reduction, it added, was largely made good by increases in the sales of short duration UK holidays and hotel breaks.

The director’s report said: “The trading environment in 2009 was difficult for tourism, particularly through the poor economic climate and the fall in the value of sterling.”

The group revised its management structure in 2009, introducing two distinct divisions; holidays and hotels.

“The group can report satisfactory progress on the commercial separation of the divisions,” it said.

The hotels division set up two new brands during 2009. Coast and Country Hotels was launched in 2009 as a premium brand with 13 outlets, while Bay Hotels was launched in 2010 with 36 outlets.

The group said the new brands and a £10m investment in its hotel estate had improved the average income from each hotel room.

Total income for the hotel division of £70.7m was 8% higher than the previous year, with 83% occupancy.

The holidays division, which operates under the Shearings Holidays, National Holidays and Caledonian Travel brands, saw sales and profits at very similar levels to 2008 despite the tough climate.

Around 640,000 (2008: 642,000) escorted tours were taken by customers of the three holiday division brands.

The division is moving from owning coaches to contracting for operating leases and the group now owns 44% of the coaches it operates.

The report added: “The group delivered robust performance with adjusted operating profit increased by 8% and the borrowings, net of cash balances, reduced by £5.3m or 21% to below £20m.”