Merlin Entertainments saw total revenue grow 4.7% in the first three quarters of the year, once currency movements are accounted for.
That was driven primarily by new openings, with like-for-like (LFL) sales up just 1.4%, despite a strong performance from Resort Theme Parks.
The shares fell 6.5% in early trading.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:
“Topline revenues might be moving in the right direction, but under the surface Merlin is struggling to get customers through the gates.
The smaller Midway attractions have been weak for some time, largely because of terrorist attacks on London dampening the tourist market in the group’s single largest destination. But the worrying thing in these numbers is that the previously strong LEGOLAND business seems to be joining the slump. The LEGO Movie 2, due for release early next year, should provide a boost in 2019. But it’s far from ideal.
A rising cost base is making matters worse, particularly in the UK where business rates and the National Living Wage are both putting pressure on margins. New attractions might keep sales moving forwards, but LFLs need to be heading in the right direction too, especially since new rollercoasters and theme parks don’t come cheap.
It would be a mistake to lose sight of Merlin’s long term strengths – namely an increasing demand for experiences over material goods and some excellent brands – but the group is undeniably going through a rough patch.”