Major theme parks including Movieworld, Sea World, and Wet ‘n’ Wild have closed their doors due to the coronavirus crisis. Village Roadshow Ltd (ASX: VRL) made the announcement late yesterday, telling the media it was a tough decision. The decision was made in response to recent Government announcements and the increase of confirmed coronavirus cases both nationally and on the Gold Coast.
Share price pain
Village Roadshow shares had surged on Friday, up more than 56% to $1.34, but remained down 67% from February highs of above $4. The theme park and cinema operator looks set for more share price pain today with the Government announcing last night that cinemas would be forced to close from midday today. At the time of writing, the Village Roadshow share price is down 22.02% today to $1.045.
Village Roadshow last week flagged a major escalation to disruption of its business from coronavirus. Theme parks were already experiencing a reduction in visitation, particularly from the international tourist market. Major studios had rescheduled a number of 2HFY20 titles including the latest instalments from the James Bond and Fast & Furious franchises.
Cost reduction strategies
With Theme parks and cinemas now closed, staff will be provided with their accrued leave entitlements while they are stood down. Village was already implementing a number of cost reduction strategies including reducing executive salaries, freezing non-essential uncommitted capital expenditure, and freezing non-essential recruitment, consulting, and advisory work.
Village is not the only ASX company that has been forced to shut its theme parks. Ardent Leisure Group Ltd (ASX: ALG) announced this morning that Dreamworld and Whitewater World would be closed from today.
The decision comes following the Queensland State and Federal Government’s most recently announced measures regarding social distancing. At the time of writing, Ardent Leisure shares are down 28.21% to $0.14.
Due to the high level of uncertainty associated with the coronavirus outbreak, Ardent has made the decision to cease operations until 31 May 2020. This date may change as further information becomes known. Ardent advises it is not possible to know how long these venues will be closed, however, it will continue to monitor the situation with a view to reopening as soon as possible.
Minimal staff will be retained during the closure of Dreamworld and Whitewater World to allow for the ongoing care of the extensive animal collection and to ensure essential maintenance works continue to be carried out. All non-essential capital expenditure has been suspended. Ardent Leisure Board members will take no fees until further notice.
Last week, Ardent announced the decision to temporarily close its Main Event centres in the US following the issue of new, stricter guidelines by the US Government to stop the spread of coronavirus. The company also previously withdrew FY20 earnings guidance due to a reduction in attendance and revenue at Main Event and Theme Parks.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.