In theme parks where killer whales remain the top aquatic stars, investors are worried about declining visitor counts at SeaWorld theme parks as orca shows are phased out.
SeaWorld Entertainment (NYSE: SEAS) reported Tuesday that the number of U.S. vacationers and international visitors to its locations dropped by 3.8% to 8.93 million in the first half of 2017, compared to a year earlier. The company said its reputational crisis and "competitive pressures" took a toll.
The company — which owns 12 theme parks in five states, including four of the top 20 in North America — said its SeaWorld theme parks in San Diego and Orlando were especially hard hit.
One concerning sign was that the number of U.S. vacationers visiting its parks dropped off after the company reduced spending on a national advertising campaign designed to boost its reputation. The company plans to reactivate its advertising push to raise awareness about its new rides and improve its brand.
SeaWorld is still having trouble shaking the fallout from a 2013 documentary film, Blackfish, that raised concerns about its treatment of orcas, or killer whales, and their trainers. Following the controversy, the company announced plans to end orca shows and breeding in a concession to animal-rights activists.
Admissions revenue and in-park spending per visitor also fell 2.1% and 0.7%, respectively, in the first half.
SeaWorld's stock closed down 6.25% to $12.76, off 85 cents a share.
In an encouraging development, attendance by locals rose. But after the disappointing drop-off in attendance among travelers, SeaWorld said Tuesday that it would also seek $25 million in fresh cost cuts to bolster the bottom line.
"While we are making progress in key areas of our plan, we are not satisfied with our results for the quarter," CEO Joel Manby said in a statement. "This quarter provided us with an understanding of what is working and where we need to make adjustments."
Second-quarter revenue was up 1% to $374 million, but that got a boost from Easter's timing this year. Revenue trailed S&P Global Market Intelligence expectations of $395 million.
The company recorded a second-quarter net loss of $176 million, largely attributable to a $269 million write-down in the value of the company's SeaWorld Orlando location.
SeaWorld has shifted its emphasis to new attractions, tailored amusement park experiences toward more natural environments and emphasized its conservation work in a strategic rebranding effort.
The company also recently announced plans to open a second Sesame Place location in the U.S. by 2021 and revealed a partnership to open a SeaWorld location in Abu Dhabi by 2022.