The shares of Ardent Leisure Group (ASX: AAD) have tumbled in early trade after the company provided the market with an update on its Dreamworld theme park and Main Event centres in the United States.
At one stage its shares were almost 7% lower, but they have since recovered slightly and at the time of writing are down 4% to $2.15.
Between December 10 and December 31 the company's Theme Parks segment recorded unaudited revenue of $3.7 million, which was down 63% on revenue of $9.9 million in the prior corresponding period.
Although this was disappointing news, it was always likely to be the case considering the reduction in ticket prices and the expected initial drop in attendees.
On a brighter note management reported that attendance numbers have steadily risen since Boxing Day and visitation levels have been more consistent following the return to service of its "Big 9 Thrill Rides".
The remainder of its rides which are still out of service are expected to be back in operation by the end of this month. In addition to this Australia's first LEGO Certified Store is due to open around the same time and is expected to be a key attraction moving forward.
Over in the United States the Main Event family entertainment brand continues its expansion, adding four new centres during the six months ending December 31. This helped the Main Event segment record unaudited revenue of US$102.1 million during the period, up 35.2% year on year.
Although this growth was impressive, constant centre revenue fell 2.9% over the prior corresponding period largely as a result of the negative impact the U.S. election had on consumer confidence.
But pleasingly post-election business has shown a return to growth and management is confident that the second half of the fiscal year will be far stronger.
Which is great news because it is the Main Event segment that makes Ardent Leisure a buy in my opinion. Currently there are 31 centres in operation across 12 states, with another seven due to open by the end of the fiscal year.
In the long-term management believes the U.S. market can accommodate upwards of 200 centres.
If it can deliver on this then I believe it will provide investors with solid earnings growth for at least the next decade. For this reason I think it is a great option for buy and hold investors, despite its Dreamworld problems and I would choose it ahead of rival Village Roadshow Ltd (ASX: VRL).
