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Thomas Cook to close 200 UK stores

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Thomas Cook to close 200 UK stores

Sam Weihagen, interim chief executive: "We cannot have shops that are not profitable"

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Thomas Cook has said it will close 200 UK stores over the next two years as part of its UK business turnaround plan - 125 more than previously announced.

Staff at 115 of the affected stores are expected to be informed of their fate on Wednesday with the loss of 661 jobs.

News of the closures came as the travel firm reported a £398m ($616m) loss for the year to the end of September.

The world's oldest travel agency has been looking to cut its debts to restore the confidence of investors.

In November, it secured £200m of new financing, just days after seeing its shares plunge 75% in one day.

Its lenders, including Barclays, HSBC, RBS and UniCredit, agreed to provide the new facility until 30 April 2013.

Thomas Cook has blamed the unrest in Egypt and Tunisia and floods in Thailand, all key holiday destinations for the company, for hitting sales.

"This has been a very challenging year for the group, despite which we still delivered an underlying operating profit of over £300m," said chief executive Sam Weihagen.

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Thomas Cook's results were hit by exceptional charges of £573m, which included write-downs in the value of its UK and Canadian business.

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Thomas Cook Group

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However, the company said its UK "turnaround plan" was underway, which aims to improve profits by £110m a year.

On Tuesday, Thomas Cook sold Spanish hotel chain Hotels Y Clubs De Vacaciones (ICV) to Grupo Iberostar for 72.2m euros ($95.4m; £61m), as part of its move to sell assets to cut its debts.

Mr Weihagen told the BBC that, despite the planned UK store closures, the company still had a "very strong presence on the High Street".

Of the 200 closures, 75 had already been previously announced following Thomas Cook's merger with the Co-op's travel agency business, which had left it with 1,300 outlets.

Mr Weihagen admitted that the business had been hit by people booking holidays on the internet.

Shares in the company have shed more than 90% of their value since March.