Carnival Cruises’ brand image seems to be sinking faster than its damaged ships.
Carnival’s image had not yet recovered from the sensational Costa Concordia tragedy when last month’s engine-room fire aboard the Triumph left passengers stranded for five days without food or functioning toilets. Since then there have been three additional ship mishaps, leading the line to cancel a dozen planned cruises.
Carnival also had less-publicized incidents recently such as the on-board outbreak of gastroenteritis (Holland America) and an on-ship robbery that left two passengers dead (P&O Cruises).
Through all this, we hear a constant stream of reassurance from both management and travel agencies: these are one-off incidents, a horrible series of coincidences, Carnival ships are safe. And while this may be largely true, the company is a long way from re-establishing its credibility. We would not urge trying to scrape this badly damaged name off the sandbar until there is a significant recovery in perception – which may be a long time coming.
We understand the “Wall Street whisper” number is looking for CCL to beat its EPS guidance. Still, even if they manage to come in at the high end of their guidance range of $1.80-$2.10 a share for 2013, this stock has run aground. Investors looking to bottom fish in CCL risk seeing themselves marooned.
