Flight Centre share price: where next after withdrawing FY20 guidance

'As we saw with both SARS and the GFC in Australia, the rebound [in international travel] can be relatively fast and strong after a fairly significant downturn.'

It was only a matter of time before companies started pulling – or at the very least downgrading – their full year guidance(s).

Treasurey Wines (ASX: TWE) did it twice in fact: first downgrading its FY20 earnings (EBITS) guidance in January, and then in February the company said that it 'no longer believes that it will achieve the previously started guidance.’

Unsurprisingly, in the last two months the stock has dropped ~45%.

Flight Centre share price: a volatile time

Flight Centre (ASX: FLT) joined the guidance pulling club today: withdrawing its FY20 earnings guidance due to ‘heighted coronavirus uncertainty’ and even announcing the closure of up to 100 of its ‘under-performing’ leisure shops in Australia.

Though a reasonable move given the circumstances, investors took that announcement as another chance to hit the sell button: Flight Centre’s stock was bid down as much as 18% today, to an intraday low of $16.04 per share.

(Mind you, the stock rebounded amid a broad market bounce-back, finishing the session at $19.15 per share, up more than 19% from its intraday low.)

So, where next?

Ultimately, though FLT’s full-year guidance has been pulled and a number of store closures announced, the company made some positive reassurances to investors today.

For one, the company noted that total transaction value (TTV) trends have thus far been in line with expectations during the early portions of H2; though the company did note that ‘demand is softening’.

Moreover, the company said that it is using this situation to not only protect its current market share, but implement strategies to ‘grow market-share and reduce costs.’

Finally, speaking of the current situation, Flight Centre’s Managing Director, Graham Turner pointed out that:

'While people are still booking travel – in February, our TTV actually increased slighlty globally compared to the same month last year – we are now seeing significant softening and expect this to continue into April at least.'

'Within this uncertain environment, our priorities are to reduce costs, while also ensuring that we and our people are ready to capitalise when the steep discounting that is underway across most travel categories starts to gain traction and as the trading cycle rebounds,’ Mr Turner added.

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