Merlin Entertainments Hit By Broker Downgrade

The FTSE 100 broke a three day losing streak this morning, gaining 17 points during early trade as British Airways owner IAG led the riser’s list. Meanwhile, Merlin Entertainments struggled as it was hit by a broker downgrade.

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shareprices.com - Wednesday, October 18, 2017

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Merlin Entertainments owns Madame Tussauds and Alton Towers, and the company will be pushing hard to grow the accommodation arm of its business, after having to cut its profits expectations following a spate of terror attacks in the UK.

Shares in Merlin fell by 20 percent after it announced that it predicted like for like sales growth of just 0.3 percent for the 40 weeks running up to October 7th.

The terror attacks in London have hampered visitor numbers, as has poor weather across the UK and Northern Europe. The company also has attractions in Florida, which has seen some recent extreme weather.

Chief Executive Nick Varney said that the decision to redirect forthcoming capital expenditure towards building more accommodation was intended to protect the company against tough market conditions. He argues that continuing to pump investment into attractions such as SeaLife would be advertising to empty seats, and that putting the money into areas where there is a stronger return on capital will mean better growth for the business, and that it would help to turn many of the existing attractions into short-break options, instead of being places that people go for a day trip. Investors have responded poorly to the report so far, but it is hoped that once the full plans are understood they will regain their optimism.

 

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