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Six Flags saw a $5 million reduction in sponsorship, international agreements, and accommodation revenue in the latest quarter.
AFP via Getty Images
Six Flags Entertainment
stock dived Thursday after the theme park operator reported a fall in revenue as fewer people visited its parks this summer.
The company reported earnings of 53 cents a share for the second quarter, almost half of the consensus call of $1.01 per share among analysts tracked by
FactSet
.
Revenue of $435 million decreased 5% year over year and fell short of estimates of $518.5 million.
Six Flags (ticker: SIX) said a decrease in attendance and a $5 million reduction in sponsorship, international agreements, and accommodation revenue affected sales.
The stock tumbled more than 21% to $20.23 on Thursday.
Attendance had understandably dipped during the first year of the pandemic. Only 433,000 visited the few reopened parks in the second quarter of 2020 versus 10.5 million in the comparable prepandemic quarter. Sales slipped 96% year over year in the second quarter of 2020 from a year earlier, and Six Flags warned of a potential cash crunch if operations significantly reduced in 2021.
Thankfully the pandemic situation improved, and the company made a strong comeback. Attendance accelerated to 8.5 million in the second quarter of 2021. The latest report, with attendance of 6.7 million in the 2022 second quarter, suggests guest visits are slowing again, but CEO Selim Bassoul has a reason.
“This is a transitional year for Six Flags, as we reset the foundations of our business model to focus on delivering a premium guest experience, while at the same time, correcting for decades of heavy price discounting,” Bassoul said in the earnings release.
Six Flags has been trying to focus on guests that can spend more. Bassoul, appointed late last year, believes the company’s historical reliance on heavy discounting wasn’t the right strategy.
“Guests who came on heavily discounted or free tickets prepandemic did not spend much time in the park, yet they used up our park capacity,” he said in an earnings call in February.
That move away from cheap season passes and free tickets is visible in this quarter’s results. Six Flags’ total guest spending per capita increased to $63.87 from $51.94 in the year-earlier quarter. The company said its guest spending per capita has increased more than 50% versus prepandemic levels.
Six Flags has been shaking things up for a while now. The North American water park operator abruptly replaced its CEO Mike Spanos in November last year. A few months later, Chief Financial Officer, Sandeep Reddy, decided to step down from his position.
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
