Skycity Entertainment Group Ltd (ASX: SKC) shares are sinking on Tuesday morning.
At the time of writing, the ASX 300 casino and resorts stock is down 9% to a 52-week low of 95 cents.
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Why is this ASX 300 stock sinking?
Investors looking closely for signs of a turnaround in the casino and resorts market may be feeling even more nervous today after a profit warning from SkyCity.
According to the release, SkyCity has downgraded its FY 2025 earnings guidance, flagging that its group EBITDA will now come in around 4% below the bottom of its prior NZ$225 million to NZ$245 million range.
This includes ~$18 million of costs related to the Adelaide B3 transformation programme for FY25, as previously announced.
What's going on?
While overall visitation remains steady, customers are spending less — particularly in Auckland.
The company notes that Auckland has seen reduced spend per visit across both its hospitality and gaming businesses, whilst Hamilton and Queenstown casinos have continued to perform broadly in line with group expectations.
SkyCity also reported that its Adelaide operations have been hit by reduced VIP spend and lower visitation. This is despite overall EGM gaming turnover in South Australia growing year-over-year.
Management advised that its VIP performance in Adelaide has been impacted by the uplift in our anti-money laundering (AML) and harm minimisation programme.
Nevertheless, it is continuing with the Adelaide B3 uplift programme. Spend on this programme will be in the order of NZ$60 million over the period FY 2025 to FY 2027 and has not altered from its previous update.
Tough trading conditions
This update underscores just how tough things remain for casino operators across the board — and it does little to ease the pressure on rival Star Entertainment Group Ltd (ASX: SGR), whose precarious balance sheet and recent operating struggles have raised concerns about its financial survival.
Commenting on the news, the ASX 300 stock's Chief Executive Officer, Jason Walbridge, said:
The difficult market conditions that businesses like ours – which are reliant on discretionary consumer spending – are experiencing continue to have a significant impact on both our revenue and earnings. We continue to be pleased with the levels of visitation we are seeing across our precincts and are adjusting our underlying cost base where appropriate, in response to the lower revenue levels we are currently experiencing.
Notwithstanding these challenging conditions, we remain optimistic that as consumer confidence returns and spend begins to lift, SkyCity is well placed to maximise the opportunities in front of us, like the New Zealand International Convention Centre (NZICC) opening in February 2026.
