When investor relations doesn't feature highly on your CEO's priority list
As every IRO knows, there are good CEOs, not-so-good CEOs and, to put it politely, disastrous CEOs. The gaffe-prone rank high in the latter group; as do those who, when in a hole, simply can’t be persuaded to stop digging. This is all from the IR perspective, of course, but given the importance of the public persona of the CEO, his or her credibility and ability to inspire confidence among investors and other stakeholders are pretty fundamental to the job.
So one can’t help but wonder how those responsible for IR at UK travel company Thomas Cook are feeling about their CEO just now. Manny Fontenla-Novoa, group CEO, was interviewed this morning on Today, the UK’s agenda-setting news and current affairs radio program, about the company’s proposed merger with the Co-operative Group’s travel business.
During the interview, the BBC’s Nick Cosgrove referred to 2010 being a difficult year for the high street travel sector and cited Thomas Cook’s own profits warning back in August. ‘If I can correct you,’ responded Fontenla-Novoa, ‘we didn’t issue a profits warning in August.’
This would have been fine if it was a case of putting the record straight. As Cosgrove confirmed later in the program, however, Thomas Cook not only downgraded profit expectations in August, but also did so again in September.
The interim management statement issued on August 11 certainly had the effect of downgrading profits expectations – not surprising, given the Icelandic ash cloud and difficult trading conditions generally. Issuing a profits warnings is never a pleasant experience for a CEO, but denying afterward that it ever happened doesn’t make things better. For anyone.
Here are just a few press extracts following the non-existent Thomas Cook August profits warning:
- Thomas Cook issues profit warning as holidaymakers leave it late – the Guardian, August 12, 2010
- Anxious stay-at-home Britons triggered a second profit warning from a major tour operator in as many days yesterday as Thomas Cook joined Thomson Holidays-owner TUI Travel in the doldrums – the Scotsman, August 12, 2010
- The update from Thomas Cook followed a similar profits warning issued the day before by its biggest rival, TUI Travel – the Independent, August 12, 2010
- [Thomas Cook] issued a profit warning in August and is in the process of identifying ‘substantial cost savings’ – FT.com, September 28, 2010.
It seems to me, if it walks like a duck, quacks like a duck, and has the same impact on the markets, then it probably was a profits warning. Not much point trying to duck the issue.
