The Ardent Leisure Group Ltd (ASX: ALG) share price share price has been hit hard again today, falling by 10.22% at the time of writing, following an announcement that it will close all of its Main Event centres in the United States (US) as the coronavirus crisis escalates.
All US Main Event centres to close
Ardent Leisure has announced that all of its Main Event entertainment centres across the US will close through to the end of March. This is following the US government’s decision to adopt harsh guidelines to stop the spread of the virus nationwide. The company said that it would continue to closely monitor the situation, but at this stage I think it appears unlikely that the centres will re-open anytime soon.
This announcement follows a withdrawal of the company’s earning guidance, only 2 days ago.
Main Event entertainment currently has 43 centres across the US. As the coronavirus outbreak in America quickly escalates, there has been a significant reduction in attendance and revenue at its centres.
Some of the strategies that both Ardent Leisure’s Main Event and Theme Parks division are undertaking to mitigate the fallout from this crisis include deferring non-essential investments and reviewing other non-critical business activities.
The US entertainment industry is now under enormous pressure. Just within the last 24 hours, all of US cinemas across the country (totalling more than 40,000) are now closed. I wouldn’t be surprised if Australia follows similar measures very soon.
This comes as the US government has dramatically ramped the restrictions on its citizens as the coronavirus outbreak spreads further. For example, San Francisco is now in virtual lockdown, with all its residents ordered to stay at home and only go out for high priority activities such as visiting a doctor, and buying groceries and medicine. This restriction is in place until at least 7 April.
It is unknown how long the virtual shut down of a large part of US entertainment industry will continue for, however judging by the escalation of lockdown measures in Europe, it is very likely to last at least for another few months, putting enormous strain on the entertainment and hospitality industries as well as travel and tourism.
Other ASX leisure shares impacted
The coronavirus situation in Australia is yet to reach the severity of what we are seeing in Europe and the US, however the Australian government is now preparing for the likelihood of a similar trend to occur here over the coming weeks and months.
Ardent Leisure is not the only ASX leisure share being impacted by the fallout from the coronavirus crisis. Other companies being impacted include Event Hospitality and Entertainment Ltd (ASX: EVT), Crown Resorts Ltd (ASX: CWN), Star Entertainment Group Ltd (ASX: SGR), and Apollo Tourism & Leisure Ltd (ASX: ATL).
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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. The Motley Fool Australia owns shares of Event Hospitality & Entertainment. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.