We're loath to say "we told you so", but on Ardent Leisure, we told you so. The entertainment group's operational performance and strategic direction is a proven, out-and-out dog.
The ghost of recently-departed chairman Neil Balnaves (AKA Chubbs Petersen) haunted investors on Thursday, Ardent stock down 21.8 per cent on its $2.17 opening to $1.69, as institutions reacted savagely to the company's piss-poor interim result. The misleading headline earnings figure (on a statutory 1H loss of $49.4 million) for star fund managers like Daily Telegraph market expert Annette Sharp was "core earnings" of $12.8 million. Understandably, that figure excludes the extraordinary (financial) impact of the tragedy at Dreamworld, but why should it exclude the capital spent opening 11 new Main Event arcades since the previous corresponding period?
Dreamworld aside, the joint is burning cash. The key measure is Main Event's continuing centre earnings, which fell 2.9 per cent because of a weak oil industry (most of these shitholes are serving the kids of rig workers in Texas), thus weak consumer spending, strong competition and self-cannibalisation (again). If they can't grow earnings in the established centres (after a large chunk of their establishment costs were generously capitalised), why are they opening another 168 of the damned things?! Again, we say: the only hope of yield-sufficient demand taking off for 1980s laser tag in Middle America is the opioid crisis. After enough Oxycodone, you might almost consider doing it. Right after you've tried shelving a stale hot dog.
This one's a mug's paradise. Tired old Dreamworld's financial problems are not going away. And while Balnaves tied his fortunes to his selection of chief executive Deborah Thomas, how deep will new chairman George Venardos be prepared to sink on the same boat?
