Theme park operator SeaWorld Entertainment Inc (NYSE:SEAS) suffered a sharp decline in attendance in the first half of 2017.
Revenue slipped 5% to US$560.1mln year-on-year, as the number of people passing through the turnstiles declined by 353,000 from a year earlier.
The company believes that the decline in US domestic attendance (defined as US-based guests that live more than 300 miles from the theme park they are attending), particularly at its SeaWorld Orlando park, was primarily driven by the combined impact of reduced national advertising and competitive pressures.
Shares tanked over 19% in pre-market at US$10.95 each.
Public perception issues...
In addition, the company believes SeaWorld San Diego was further affected by public perception issues that have – if you’ll forgive the pun - resurfaced since the company reduced marketing spend on its reputation campaign.
A number of animal rights groups have attacked the company’s treatment of its animals, and succeeded last year in persuading the company to change its breeding program for captive killer whales.
SeaWorld responded to the public’s growing distaste of animals being kept captive for human entertainment purposes by playing up its animal rescue efforts and educational efforts.
The company posted a net loss of US$237.0mln after taking a non-cash US$269.3mln write-down on the value of its SeaWorld Orlando park. In the same period of 2016 it made a loss of US$66.28mln.
Adjusted underlying earnings, or EBITDA, splashed down at US$73.9mln, down 5% from US$77.8mln in the corresponding period of 2016.
The company said it expected to report EBITDA of between US$280mln and US$310mln.
It expects to achieve its targeted US$40 million in net cost savings by the end of 2018, and is identifying additional areas for cost reduction.
Not satisfied with results..
"While we are making progress in key areas of our plan, we are not satisfied with our results for the quarter," said Joel Manby, president and chief executive officer of the company.
"This quarter provided us with an understanding of what is working and where we need to make adjustments. We are increasing our investment in national advertising to generate sufficient awareness of our brand attributes and strong new rides and attractions, developing a new national marketing campaign emphasizing our distinct experiences, and reinvesting in our reputation messaging to target perceptions in key markets, particularly California. We will offset this increased advertising with additional cost reductions,” Manby said.