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Close 135 stores? No way, says Flight Centre

Flight Centre has practically told Macquarie to re-check its numbers after analysts suggested that the travel group should drastically reduce its retail presence in order to achieve financial growth.

Flight Centre has practically told Macquarie to re-check its numbers after analysts suggested that the travel group should drastically reduce its retail presence in order to achieve financial growth.

In a note allegedly issued to clients this month, analysts reflected on Flight Centre’s 36 percent drop in half-year profits, saying it may have been a result of the group’s large bricks and mortar presence in Australia, the Financial Review reported.

Macquarie said the company’s total transaction volume (TTV) hasn’t increased in over four years and “additional store opening have been dilutive to sales productivity”.

flightcentre-store-karryon

The note continued, saying that in order to return to 2012 growth rates, Flight Centre would need to cut its current 678 locations by around 135.

“To return to same store growth as seen in 2012, Flight Centre would need to close the number of stores it opened in the period from 2012 to 2016.”

Macquarie Bank

“This equates to approximately 20 percent of the current total of 1,536 teams. Given Flight Centre has 678 physical locations, this would mean closing 135 stores.”

However, Flight Centre has rebutted Macquarie’s suggestions, by noting “major issues with the assumptions that have been made and the calculations”.

Flight Centre

A spokesperson told the Financial Review that the group reviews its portfolio regularly and currently sees “no need to close 135 shops in Australia”, especially when they’re all profitable businesses.

“Our focus in the short-term is on enhancing productivity and we’re having some success in that regard.”

Flight Centre spokesperson

“There’s more work to be done and we’re also focusing on growing revenue more rapidly and cutting costs to improve performance in a tougher trading climate.”

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