Merlin shares slump as trading woes overshadow Peppa Pig deal
The owner of Madame Tussauds and Alton Towers has seen its shares plunge by a fifth as peak summer trading woes after UK terror attacks took the shine off a worldwide Peppa Pig deal.
Merlin Entertainments' latest trading figures confirmed a "difficult" summer for the company's London attractions and UK theme parks after a spate of terrorist attacks, which saw group like-for-like revenue growth almost grind to a halt, edging up 0.3% in the 40 weeks to October 7.
Poor late summer weather across the UK and Northern Europe and extreme weather in Italy and Florida were also to blame, according to Merlin.
Shares slumped as the group said trading was set to remain under pressure for its London attractions for the "foreseeable future" and announced plans to redirect £100 million of investment.
The stock market hammering came despite the group unveiling a deal to roll out new Peppa Pig attractions worldwide.
Merlin Entertainments has struck an agreement with Entertainment One - which owns the rights to the popular children's cartoon character - to develop new attractions and themed accommodation based on the pre-school favourite.
But the deal does not cover the UK, where there is already Peppa Pig World at Paultons Park in Hampshire under a long-standing agreement, and is also non-exclusive in China.
Nick Varney, chief executive of Merlin Entertainments, said: "After strong early-season momentum across most of our businesses, we have experienced difficult trading over the summer period, as the spate of terror attacks witnessed in the UK marked an inflection point in Midway London and UK theme park trading. "
Its London attractions - which includes the Coca-Cola London Eye and the London Dungeons - saw a marked drop-off in visitor numbers after the recent spate of attacks, while the group's theme parks also suffered in a "difficult" market after the UK's threat level was raised.
Figures showed like-for-like revenues fell 2.1% across its theme parks worldwide in the 40 weeks so far of its financial year, with sales down 1% for midway attractions, although Legoland parks notched up growth of 3.4%.
Merlin said trading had also been "mixed" in recent weeks and predicted flat like-for-like revenue growth over the year ahead.
Steve Clayton, a fund manager at Hargreaves Lansdown, said: "Tourism businesses always have to contend with the weather, but terrorism is unfortunately becoming an increasing, additional headwind."
Merlin said 2017 earnings are set to grow to between £470 million and £480 million, up from £451 million in 2016, as it keeps a tight lid on costs amid tougher trading and cost pressures.
It will also redirect £100 million of investment away from its attractions between 2018 and 2021, putting the cash instead into developing new hotels.
But it said investment in health and safety and repairs and maintenance at resorts would not be affected by the move.
Safety within the group has been in the spotlight since the accident on its Smiler rollercoaster in June 2015, which led to two young women having legs amputated.
Details of the deal with Entertainment One showed the first new Peppa Pig attractions will open within existing resorts in 2018, with a standalone attraction due to open in 2019.
Merlin is also launching a new adventure-based attraction with TV's survival expert Bear Grylls.
The first Bear Grylls Adventure attraction will open in Birmingham next year.
It comes after Merlin last week denied takeover talks with SeaWorld following reports suggesting it had approached the group.