Cruise operator Carnival on Monday forecast third-quarter profit largely below estimates as rising marketing and labor costs eat into gains from higher ticket prices and strong demand.
A Carnival cruise ship is docked, amid the coronavirus disease pandemic, in Long Beach, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/File Photoon Monday forecast third-quarter profit largely below estimates as rising marketing and labor costs eat into gains from higher ticket prices and strong demand.
The company's shares, which have surged nearly 80% in the past two months on resurgent demand for cruises, dropped 11%. Carnival has increased marketing spend to attract new customers and gain an edge over its competitors even as it faces elevated labor costs as it adds staff to manage higher occupancy levels and battles higher fuel prices.
Chief Financial Officer David Bernstein said a slower-than-expected drop in inflation with respect to port expenses, freight, crew travel has pushed the company to raise its cost outlook. Still, Carnival lowered its annual loss forecast banking on higher ticket prices and U.S. customers including the younger population shelling out money onM Science analyst Michael Erstad said the company's forecast suggests that the robust demand trend would continue, while adding that Monday's share performance, in part, reflected the higher cost outlook.
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