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Six Flags dropped $5 million in sponsorships, international deals, and accommodation revenue in the most recent quarter.
AFP via Getty Images
Six Flags Entertainment
Shares fell on Thursday after the amusement park operator reported falling revenue due to fewer people visiting its parks this summer.
The company reported earnings of 53 cents a share for the second quarter, nearly half of the $1.01-per-share consensus call among analysts tracked by
FactSet
.
Revenue of $435 million fell 5% year-over-year and fell short of estimates of $518.5 million.
Six Flags (ticker: SIX) said reduced attendance and a $5 million drop in sponsorships, international deals and accommodation revenue impacted sales.
Shares fell more than 21% to $20.23 on Thursday.
Attendance has understandably dropped in the first year of the pandemic. Only 433,000 visited a handful of parks that reopened in Q2 2020 compared with 10.5 million in the equivalent pre-pandemic quarter. Sales were down 96% year-on-year in Q2 2020 from a year earlier and Six Flags warns of possible cash crunch if activity drops significantly by 2021.
Thankfully, the pandemic situation has improved and The company has grown stronglyk. Attendance accelerates to 8.5 million in Q2 2021. The latest report, with 6.7 million in Q2 2022, shows visitor arrivals are slowing, but Selim CEO Bassoul has a reason.
“This is a transition year for Six Flags, as we re-found the foundation of our business model to focus on delivering a superior customer experience, while overcoming price discounts. too high for decades,” Bassoul said in the earnings release.
Six Flags has tried to focus on guests who can spend more. Bassoul, appointed late last year, believes the company’s history of reliance on large discounts is not the right strategy.
He said on an earnings call in February: “Guests who bought free or high-priced tickets didn’t spend much time in the park, but they used up the park’s capacity.
This quarter’s results clearly see a shift away from the low-cost and free-ticket season. Six Flags’ total per capita visitor spending rose to $63.87 from $51.94 in the first quarter of last year. The company says visitor spending per capita is up more than 50% from pre-pandemic levels.
Six Flags has been rocking things for a while. North American water park operator Sudden replacement of CEO Mike Spanos in November of last year. A few months later, the Chief Financial Officer, Sandeep Reddy, decided to step down.
Three out of 13 analysts rate the stock as Neutral, while 10 rate it as Buy.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
