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Carnival Corp.
shares lost more than a fifth of their value Friday as the cruise giant struggled to win over travelers without offering discounts.
Carnival’s loss narrowed and sales rose significantly in the third quarter from last year, when tight Covid-19 restrictions limited cruises, but results fell short of Wall Street expectations.
Costs from everything from food to fuel squeezed the company’s profits more than expected, and problems were compounded as it cut prices to fill its ships.
Shares of Carnival fell as much as 23% Friday. They were recently trading at $7.24 a share, down 21%, on pace to close at its lowest price in nearly three decades. The results also hammered other cruise operators, sending shares of
down 12% and
Norwegian Cruise Line Holdings Ltd.
down 16%.
Chief Executive
Josh Weinstein,
who succeeded longtime CEO Arnold Donald last month, said that the cruise line needs to raise its prices, especially as cruises currently cost less than land-based accommodations such as hotels and resorts.
“We should not be priced at a significant discount to land,” he said on a conference call with analysts. “Bottom line, when it comes to generating demand and increasing our revenue profile, we can, should and will do better.”
The company is preparing to wean customers off discounts next year by limiting promotions and offering them to a select group of people, executives said.
Carnival, which caters more than its rivals to the middle-market cruising category, where customers could be more affected by inflation, has been filling its ships during the past year by offering promotional deals as departure dates near.
The company has loosened its Covid-19 protocols, including by eliminating its predeparture testing requirement and by allowing unvaccinated guests. Those new policies took effect earlier this month, and executives said the company has already seen a boost to bookings.
Overall for the quarter ended Aug. 31, Carnival posted a loss of $770 million, or 65 cents a share, narrowing from the loss of $2.84 billion, or $2.50 a share, it posted a year earlier. That still fell short of Wall Street expectations for a loss of 9 cents a share, according to FactSet.
Revenue jumped to $4.31 billion for the quarter from $546 million a year earlier. Analysts surveyed were looking for sales of $4.9 billion.
Write to Will Feuer at [email protected]
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