E-Tail Blues Hit Travel.com.au
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[Sydney, AUSTRALIA] Travel.com.au has announced losses over AUS $2 million (US $1.2 million) greater than the AUS $4.8 million (US $2.9 million) forecast in the company's prospectus.
Its not all doom and gloom though, the company boasted strong growth in Q2, with sales up 20 percent in the previous quarter, and almost 200 percent in the same period last year. Registered users of the travel site grew from 60,000 to over 224,000 in the last financial year and the company expects to break even over 2000/2001.
"The core business of travel sales will be profitable, but profit will continue to be impacted by the planned spend on IT R&D and the establishment of [B2C startup] lastminute.com," the company said. Higher IT costs were also blamed for the poor profit performance in 1999/2000. "However, without externally led Y2K and GST issues in 2000/2001, IT costs will conform to management planning for business growth," the company claimed.
Travel.com.au plans to dodge the retail slump by targeting the B2B market. While the corporate division brought in around AUS $25 million (US $15 million) in revenue over the last financial year, this is expected to grow to AUS $60 million (US $36.1 million) in this year. But "nothing's changed," according to CEO David Tonkin, "we're still a consumer play." Tonkin said that the company had recently lost out on a AUS $17 million (US $10.2 million) corporate deal, but would continue to pursue the high end of the market.