The 170-year-old travel company said it expected full-year EBIT (earnings before interest and taxation) of 320 million pounds ($513 million), compared with a market consensus for around 380 million.

Shares in Thomas Cook have lost nearly 60 percent of their value since January.

“It is not the downgrade but the scale of the miss that is the surprise,” said KBC Peel Hunt analyst Nick Batram.

“This raises questions about just how flexible the business model is, or whether management just called it badly wrong.”

Thomas Cook said the profitability of its British business continued to be hit by difficult trading conditions, mainly as a result of the continued squeeze on disposable income, and it would conduct a fundamental and strategic review.

British consumer confidence slipped in June as a boost from April’s Royal Wedding and a run of sunny May public holidays gave way to harsher economic realities.

Although Thomas Cook had said in May it would examine the structure of the British business, Numis analyst Wyn Ellis said the review was “more sinister than the profits warning” and the shares were best avoided until clarity emerged.

“The review is likely, in our view, to conclude that the retail estate should be reduced in size with consequent short-term exceptional costs and challenges for maintaining share in the cut-throat online market for holiday sales,” he said.

A proposed merger of Thomas Cook’s British retail operations with those of the Co-operative Group is being examined by the Office of Fair Trading.

Thomas Cook said the MENA impact had been higher than previously anticipated, with its French business seeing reduced demand and lower margins during the peak season for key destinations in Egypt, Morocco and Tunisia.

It said around two thirds of the profit shortfall was because of tough conditions in Britain with the MENA disruption accounting for the remainder. Thomas Cook said the remainder of its business was performing in line with previous guidance.

TUI Travel said in May it was on track to meet full-year expectations as increased demand for alternative destinations offset the impact of unrest in Egypt and Tunisia.

Panmure Gordon kept a ‘hold’ recommendation on Thomas Cook stock but cut its price target to 120 pence from 178 pence.

“Recent weakness in the share price had suggested all was not well at Thomas Cook and, whilst some of its problems are clearly generic to all tour operators, we do believe there are some company specific issues, particularly in the UK business,” said Panmure analyst Simon French.