First Leisure warns of hit as tourists desert Blackpool for foreign shores

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The Independent Online
First Leisure, the leisure group run by the former Channel 4 boss Michael Grade, was yesterday forced to issue a profits warning after admitting that the Blackpool illuminations had proved a turn off for tourists last month.

Andrew Yates examines the ramifications for a group that has already been under the bid spotlight after its share price has tumbled over the last 12 months.

Last month holiday makers, flush with building society windfall payments, flocked to foreign shores rather than visit the delights of Blackpool and their famous illuminations.

First Leisure, owner of the Blackpool Tower, yesterday admitted that trading in its resorts division had been hit by the lack of tourists in what is normally the seaside town's busiest month.

Graham Coles, finance director, said: "There were less people in Blackpool. More windfalls meant tourists went overseas. The short-term effect on business of the death of Princess Diana and the less amount of attention given to the Tory Conference than usual also affected business."

First Leisure also admitted it would take a large hit in its final results for the year to November after having to write down the value of its loss-making bingo division. Mr Coles denied that the bingo division was up for sale but admitted it would be disposed of if the group could not turn it around soon.

Simon Johnson, leisure analyst at BZW, said: "They have recognised that bingo has been a disappointment. This prepares the ground if they do want to dispose of the business."

Mr Johnson believes First Leisure has spent a total of pounds 60m on its bingo business but the properties, including bingo halls, are now only worth around pounds 20m. So the write down could be anything up to pounds 40m.

Analysts lowered pre-tax profit forecasts by pounds 1.5m to around pounds 43m for the current financial year.

First Leisure's shares have underperformed the stock market by more than 30 per cent over the last 12 months and the announcement sent the shares falling another 3.5p to 287p.

The lastest disappointing statement is bound to fuel speculation that the group could succumb to a takeover bid. Bass, which recently lost out to Nomura in the race to buy the William Hill betting chain, is thought to be running the bid sliderule over the company.

However, First Leisure is keen to maintain its independence and is believed not to have held any serious discussions with any rivals.

One analyst said: "It does make First Leisure look more vulnerable to a takeover. But you have to ask who is likely to buy the business. I am sure Bass has a file on it. However, it is unlikely that anyone would be interested in the whole business."

First Leisure's night-clubs and bars have both performed well over the summer months with second-half sales up 18 per cent in total and 5 per cent on a like-for-like basis.