http://www.fool.com/News/mft/2006/mft06050913.htmOpen Season for Six Flags
By Rick Aristotle Munarriz (TMFBreakerRick)
May 9, 2006
Mark Shapiro's first complete quarter at the helm of Six Flags (NYSE: PKS) was hardly a telltale showing. With most of the regional amusement park operator's properties not open during the months making up the quarter, Six Flags has historically produced just 5% of all of its revenue during the period.
Even though attendance at the operating parks dropped from 1.5 million to 1.15 million during the three months, revenue fell by just 13.9% to $42.7 million. The reason that the top line fell by only half of the turnstile clicks is that Shapiro's initiatives to give guests reasons to spend more money while at the park are bearing fruit. Per capita revenue grew by 13% because of higher ticket and parking prices as well as a refreshing double-digit percentage increase in in-park spending.
That last point is important because it indicates that even though folks may be initially reluctant to pay more to enter a Six Flags park this year, once inside, they are being won over to the point of easing up on the billfold throughout the day.
Cynics would say the decreased attendance is because of the higher prices, but it's actually because of the timing of the Easter holiday. Schools that were out around the holiday in March 2005 had their breaks in April 2006. Other factors included rainy weather in key markets and a 100,000 hit in attendance at the company's Mexico City thrill park, because schools there are no longer allowed to schedule field trips to amusement parks. Six Flags indicates that attendance did stabilize in April.
The fluctuating Easter holiday makes one wonder if regional operators like Six Flags and Cedar Fair (NYSE: FUN) shouldn't follow retailers in moving to fiscal years that end in January or April instead of December.
Yes, the quarterly loss widened compared with last year, but the company is doing so many things right that it would be a shock to see it not come through with a solid showing in the first year of its brand rebuilding strategy.
Getting excited about Six Flags -- perhaps for the first time in years -- is as easy as embracing the magnitude of the in-park improvements. Food and retail spending per guest are up 15% and 10%, respectively. The company's rollout of character meals has been a big winner. Brunch with Bugs may not sound like the most savory concept until you realize that it's Six Flags cashing in on the licensing of Bugs Bunny and other Time Warner (NYSE: TWX) characters.
Six Flags is charging $14.99 a meal for kids and $17.99 for adults -- a price that's more than reasonable compared with the character meals Disney (NYSE: DIS) offers at its parks -- and it's giving families plenty of photo-snapping opportunities to make their day more memorable. Kids also get carrot-shaped hats at the brunch. It's a nice gesture that's likely to translate into great referral business as kids stroll around the park wearing them.
Two months ago, I predicted that attendance would fall in 2006, but that per-capita spending would soar. I still stand by those two assumptions. Even though the company has struck some intriguing partnership deals with the likes of Papa John's (Nasdaq: PZZA) and Home Depot (NYSE: HD), the story this year will be less about the number of turnstile clicks and more about how wide the pocketbooks are opening.
At the end of the day, it doesn't matter that season ticket sales are off if they are replaced by quality traffic. This will serve Six Flags well as the company claws its way out of the debt-burdened hole that the previous regime left it in. It's a long way out, but at least Six Flags is moving in the right direction.
Brunch with Bugs isn't a prelude to Dinner with Maggots.
Topic: Open Season for Six Flags (Read 1150 times)