It seems now is not the time to be a leisure and entertainment operator. The Ardent Leisure Group Ltd (ASX: ALG) share price is down 60% since its pre-COVID levels, with today's 1H21 result showing mounting losses and more uncertainty.
Ardent share price slips on mounting losses
The Ardent share price is currently down a modest 1.59% to 62 cents, perhaps signalling that the losses and uncertainty came as no surprise given current circumstances.
Ardent's revenue declined 44.3% to $137.6 million, driven by COVID-19 adversely impacting visitation to both its entertainment and theme park venues. This translated into an $84.6 million net loss before tax, compared to the $34.6 million in 1H20.
Segment overview
Ardent's Brisbane-based theme parks and US indoor entertainment attractions represent its core segments.
The company's theme park attractions, notably Dreamworld and WhiteWater World, remained closed until 16 September 2020. This, along with ongoing border restrictions, led to a decline in attendance and revenue compared to 1Ha20.
Despite the 63.6% decline in revenue to $13.1 million, the division recorded a modest earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $3.6 million, compared to $5.4 million in 1H20.
Ardent believes its theme parks division is well-positioned to participate in the post-pandemic recovery, focusing on discounted annual pricing and new products for when restrictions ease.
Ardent's entertainment division incorporates 44 centres in the US with a unique 'eat, bowl and play' experience. This segment saw a 37.7% decline in revenues to US$54.4 million, reflecting lower consumer demand and temporary centre closures during the period.
A second surge of COVID-19 cases in the US in November and soft corporate event sales during the holidays lead to a decline in performance to close out the first half of FY21.
Despite the headwinds, the entertainment division has proved to be resilient in earnings and recovering at a pace quicker than anticipated. For January 2021, 37 of its 44 centres generated positive EBITDA.
Looking ahead
The company expects trading in the second half of FY21 to be challenging due to ongoing uncertainty associated with COVID-19 and the end of the JobKeeper subsidy.
While the Australian Government vaccine program provides an optimistic outlook, Ardent believes that uncertainty is likely to prevail for the next 12 months.
