Ann: Market Update, page-5

The devil is obviously in the detail

Yeah well that's where it usually is but I'm not so sure this time. I'm assuming that a part of the growth is abnormal, that not all of the growth is structural. I think that sometime soon Flight Centre will come knocking on the door and demand some of their money back. I have no idea how much of this year's result is sustainable, and quite frankly, I don't think the management will know either and that's not their fault. Just a product of the world we're currently living in. As I mentioned once before on an ARB thread, neither the Gross Profit nor the Cost of Goods Sold is readily visible inside the produced accounts so how much the improvement in the Profit to Revenue percentage is a result of price increases and how much is a consequence of the economies of scale kicking in is difficult to determine (given that price increases may represent a structural gain while an abnormal increase in revenue may not).
This is a great company doing a great job and producing a great result. The thing is I usually read their result quickly, update some spreadsheets and move on. This time it will require more pondering as to how much reversion to a mean may be involved going forward.
This is not the only result this season that will offer the same dilemma.