- REUTERS/Pierre DuCharme
LONDON – Shares in the theme park and leisure group behind Legoland and Thorpe Park crashed more than 20% on Tuesday after the company warned terrorism and bad weather are denting business.
Merlin Entertainment, which also owns Alton Towers, Madame Tussauds, and Sea Life aquariums, warned investors on Tuesday that it had experienced “difficult summer trading” across Europe “as a result of the series of terror attacks and unfavourable weather.”
CEO Nick Varney said in a statement:
“After strong early season momentum across most of our businesses, we have experienced difficult trading over the summer period, as the spate of terror attacks witnessed in the UK marked an inflection point in Midway London and UK theme park trading. Poor weather in Northern Europe and extreme weather in Italy and Florida also impacted peak season trading.
“Despite the diversity of our business – by geography, brand and visitor mix – our markets continue to be impacted by certain external shocks, not least terrorism which is currently at record levels of intensity in Europe. We also continue to face significant cost pressures, largely brought about by employment legislation, particularly in the UK.”
It’s the second time this year Merlin has warned that terrorism is hitting its business, following a similar investor update in June.
Merlin warned that profits for the year are set to be flat, below market expectations. The profit warning sent shares crashing by nearly 20%:
- Markets Insider
Neil Wilson, a senior market analyst at ETX Capital, said in an email: “Merlin reports ‘unprecedented levels of demand volatility’ as tourists shunned busy London attractions.
“Merlin cites a material deterioration in international tourism over the peak trading period, but this does not tally with the figures showing record inbound tourism in the UK, which may be indicative of a problem with some the older attractions it owns. The outlook is also gloomy, with the company expecting depressed earnings from London sites to persist ‘for the foreseeable future’.”
Varney said Merlin plans to “‘adjust the tiller’ given the difficult market conditions.” £100 million that would have been spent on renovating and upgrading Merlin’s existing attractions will now be spent on the company’s hotels business, which is performing better than attractions.
Merlin also announced two new attractions being developed: ‘The Bear Grylls Adventure’ and a ‘Peppa Pig’ theme park. The company confirmed that Legoland New York is set to open in 2020, with development estimated at $350 million (£262 million).