Everyman Media Group PLC (AIM:EMAN), a premium cinema operator, returned to profits in 2022 for the first time since the pandemic, but investors appear cautious about its long-term success after shares dropped by 5% on Wednesday.
Operating profits of more than £400,000 versus a £2.2mln loss in 2021, expanding venues across the country and the sight of lockdowns in the rear-view mirror.
These were likely reasons to cheer for the UK-based group, especially when rivals Cineworld filed for Chapter 11 and talks of buyouts across the industry linger.
True, the group posted a pre-tax loss of £3.5mln but before amortisation and share scheme adjustments profits jumped 75% to £14.5mln.
“Posh cinema operator Everyman Media has a tricky path to navigate through the cost-of-living crisis,” said analysts at AJ Bell.
“It needs to keep prices low enough that it remains an affordable luxury for a large enough audience,” the financial company added.
Everyman prices are significantly higher than other cinemas in Britain.
For the newly released The Super Mario Bros. Movie tickets cost around £15, almost double the average £8 price charged by competitors Vue, ODEON and Cineworld.
The Super Mario Bros. Movie grossed more than £300mln in its first five days of release. Source: Engadget
On average in 2022, the high-end cinema saw customers pay £11.29 per ticket compared to £11 the year before.
If the average ticket price moved in line with UK consumer price inflation, which grew by 10.5% in the 12 months to December 2022, it could have increased to more than £12.
“The company’s model is also reliant on people taking advantage of the opportunity to order food and drink to their seats,” AJ Bell added, warning that people not eating could weigh heavily on profits.
Yet, the average food and spend per head increased from £9.07 in 2021 to £9.34 last year.
Everyman began adding specials to the dishes its serves, something it said, “had a demonstrable impact on sales of hot food”.
“Innovation in our food and beverage offering is expected to continue to drive spend per head moving forward,” Everyman added in its full-year results.
Everyman offers a wider range of food than the traditional theatres. Source: Company
AJ Bell also noted: “The business appears to be doing a decent job by announcing a big jump in admissions in 2022.”
Ticket sales jumped 69% to over 3.4mln in 2022, Everyman revealed, with monthly average admissions reaching 284,000.
However, in 2021 venues remained shut until 17 May due to Covid restrictions.
Considering the shorter period Everyman was open for in 2021, its monthly average was actually higher than in 2022 at 311,000.