Shares plunge for Merlin as Legoland sales slip

Entertainments company Merlin has seen its share price fall sharply after its Legoland division failed to build on sales.

Like-for-like revenues for the division fell 0.3% in the 40 weeks to 6 October after "marketing challenges" relating to one of the eight parks - which was not named.

Merlin's "Midway attractions", a group including Madame Tussauds and the London Eye, reported a 0.7% decline blamed on the continued adverse effect of terror attacks in 2017 - though there have been signs of a recovery in recent weeks.

But the company's theme parks division, which includes Alton Towers, reported 8.3% like-for-like growth after "favourable" weather in northern Europe.

Sales at the wider Merlin group rose 1.4% and it said it expected annual results to be in line with expectations. Shares (Berlin: DI6.BE - news) fell by as much as 8% by the close of trading.

Chief (Taiwan OTC: 3345.TWO - news) executive Nick Varney blamed the "febrile nature of the markets" for the shares fall and described the performance of Legoland as a "blip".

He forecast a bounce-back thanks to marketing and promotional tie-ups with Lego Movie 2, due for release in February.

But Mr Varney warned of a potential "disastrous" impact on Merlin should a "no-deal" Brexit result in visitors from the European Union - who make up half of visitors at its London attractions - requiring a visa.

He also highlighted cost pressures, with tighter labour markets in parts of the world adding to challenges such as Britain's national living wage.

Nicholas Hyett, equity analyst at Hargreaves Lansdown (Frankfurt: DMB.F - news) , said: "Under the surface Merlin is struggling to get customers through the gates.

"The smaller Midway attractions have been weak for some time, largely because of terrorist attacks on London dampening the tourist market in the group's single largest destination.

"But the worrying thing in these numbers is that the previously strong Legoland business seems to be joining the slump."