Six Flags is aiming to have fewer customers, analyst says

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Theme parks have had a rocky year as they look to bounce back from the lows of kova 19 and our next guest says estimates need to come down to better reflect the challenges ahead city research director james hardman joins us now james good to uh good to see you again we’re right in the middle of fright fest for six flags and it’s been a very frightful year for that

Company they have really been struggling how do you think this quarter shaped up yeah i mean and you’re right it has been a tough year for these guys they had a new strategy where they’re essentially aiming to to have fewer customers right but the strategy that we that’s not a good strategy please we don’t want to let you in but pick less business we’re okay

With that that’s right it’s that well we dubbed the jerry maguire strategies right you were customers more more profits better service um that may have made more sense come into this year it’s been i think it’s it’s been a tough sell as some of these macro pressures have mounted and so to answer your question i do think it’s a tough third it was a tough third

Quarter for these guys i think estimates probably are too high i think attendance if anything it was pretty pretty bad in the in the second quarter if anything there’s a good chance that that got worse here in 3-q james for the the lay person following this six flags story and the ceo made some just bizarre comments on that last sirens call but pushed out aside

What is wrong with six flags is it the the stands where they get the food are the rides not cool enough is it a combination of all that or is it just too expensive to go to these parks yeah i think it’s a it’s a combination of all of those things relative to other theme parks um six flags has historically not been able to get the pricing that that those others

Have and that they would hope to particularly since they cater to you know some of the the biggest cities in the u.s with some of the best uh disposable income it tends to be a lot more teenager oriented as opposed to family oriented and i think that plays a role uh in terms of the pricing that they’re able to get um you know there’s an argument to be made that

They haven’t invested enough in their parks over the years um and that has also led to this uh sort of lower quality experience at least that being the perception and so i think that’s all what predated this this new concept that they ultimately had they didn’t put it this way but that they fired their customers uh in in a lot of ways and and you got to be real

Careful with that suffice to say that’s bad news for the dip and dot barometer james when we think about someone the other major theme parks that are out there i mean what is going to be vastly different between this year and next year this was supposed to be that travel demand boom year that revenge experiential economy year if not this year then what does that

Shape up for next year for the theme parks yeah it’s such a great point i mean we were believers that there was this pent-up demand as we exited the pandemic for exactly these types of experiences unfortunately there isn’t a whole lot of daylight between the post uh pandemic phase or story uh and the pre-recession or recession story and i think that’s those two

Things ultimately butted up against each other here here in in the summer of 22. i’ve got numbers lower for next year um we have seen pretty consistently over the course of the summer slowing slowing demand trends for the theme parks now the good news is i do think that these companies these businesses tend to hold in better uh or uh better than some of the other

Discretionary names that i follow right um and so they’re gonna feel it i think attendance is likely to be down sales are likely to be down uh but they generally hold in pretty well and the reason for that is they tend to be trade down beneficiaries right as opposed to you know once travel turns over if in fact it does uh these tend to be cheaper alternatives than

Going to you know orlando or mexico or europe james uh what you often see in a lot of these theme park parking lots is winnebago’s family take these winnebagos and they go to the theme parks now that is a stock you cover this company just reported earnings take us through their their inventory situation are they able to get the semiconductors and the supplies they

Need to get these uh trucks or these mobile homes out of the showrooms and into the to the front porches or the driveways of customers yeah i mean so that that that was the narrative um for so much of 2021 in the early part of 2022 could they get this supply out there because there was very much the belief uh that true demand was better than these reported retail

Numbers i.e if you had more product you could sell more product uh i think that narrative has changed over the past three months and and oh by the way i don’t think it’s just for rvs uh i think uh the ability to stock showroom floors um has improved dramatically uh and and if you want to get one of these you you can get one of these right now uh i think that the

It’s a double-edged sword now though uh the concern is that these manufacturers will pump up the channel too much with some of these inventories uh and and that would ultimately turn make a bad situation worse as we think about a potential recession and again it’s not just rvs i think this whole debate as to are we are aren’t we heading towards a recession um in

What i cover right big ticket discretionary in a lot of ways it feels like we’re there or or fastly uh quickly approaching uh that place it does seem like over the past few months uh supply has improved uh but the demand has not all right well for those of us brian and myself included who are priced out of the housing market the rvs are looking pretty good baby

City research director james hardiman thanks for taking the time here today have a great weekend

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Six Flags is ‘aiming to have fewer customers,’ analyst says By Yahoo Finance