Shares of Cineplex Inc. (TSX:CGX) were down 3.8% in early morning trading on November 7th. The company released its third-quarter results the same day before trading began.
Total revenues dipped 1.5% to $370.4 million compared to $376 million in the third quarter of 2016. Attendance experienced a 12.8% dip to 16.8 million in the 3 months leading up to September 30th. This summer was one of the worst the North American box office has seen in decades in terms of overall attendance, and it appears Cineplex felt the pinch of this trend. Even a record September could not make up for the decline.
Cineplex saw its net earnings drop 33.8% to $17.2 million from $19.2 million in the previous year. Box office and concessions revenues per patron saw a marginal increase due to increased costs. Cineplex also announced that it had opened its third The Rec Room location in Edmonton. Its SCENE loyalty program also grew its membership to 8.7 million in the third quarter.
Cineplex still offers a dividend of $0.14 per share with a 4.5% dividend yield. The rise of Netflix, Inc. and other streaming options can investors justify buying Cineplex?
The next few months are going to be crucial for movie theatres. The blockbuster releases of Thor: Ragnarok, Justice League, and the eighth Star Wars installment are expected to boost attendance in the fall and winter months. Any major disappointments could generate major pressure on an industry that is threatened by the rise of home entertainment.
