Magic wearing off for Merlin as terror fears cause 20% plunge

“Unprecedented” terrorist attacks in London and Europe have hit revenues at Merlin Entertainments’ London and European theme parks, sending the shares plunging by almost 20% earlier.

The operator of Alton Towers, Madame Tussauds and Legoland said a spate of terrorist incidents, starting with the Westminster Bridge attack in March, had resulted in flat like-for-like sales. Shares in the company fell 87.1p to 362p.

Summer trading was also hit by bad weather in the UK and Germany, flash floods in Italy and Hurricane Irma in the US.

Merlin’s chief executive Nick Varney argued that investors had overreacted to the leisure parks operator’s trading update, saying the company was still seeing 12.7% growth in revenues at the group level and would open 10 new attractions this year.

“Terrorism does have an impact on the business and because of this we can’t expect the existing estate to grow at the level it has been,” Varney said. "But we now have half our business in Europe, the Middle East, Asia Pacific and the US and in future we will continue to expand in these areas, which helps reduce our exposure to areas where trading is difficult.”

Merlin plans to switch spending from the existing estate into new areas including providing accommodation and glamping on resorts.

The resorts operator also confirmed it would open a Legoland in New York in 2020, following a successful opening in Japan this year.

Legoland Parks were the only area of increased like-for-like growth, with a 3.4% improvement in sales over the 40-week trading period to October 7. Merlin also plans to open a Bear Grylls adventure venue in Birmingham next year, followed by parks in the US and China.

It has tied up with TV rights firm Entertainment One to open a Peppa Pig theme park in 2019 after securing global exclusive rights outside the UK.