Share volatility after Ardent Leisure announces new Chief Executive

Shares in industry-wide leisure group Ardent Leisure dropped sharply yesterday (11th March) after the surprise announcement of the appointment of former magazine editor Deborah Thomas as the group's new Chief Executive.

Ardent announced on Tuesday that Thomas would replace Greg Shaw in July, when Shaw's 13-year period at the group comes to an end.

Ardent Leisure's stock slumped dramatically in early trade on Wednesday but had recovered to close down 46.5¢ (19.14%) at $1.965 with 28.6 million securities having changed hands.

The slide prompted the group to issued a statement acknowledging the steep fall and confirming that a conference call was held between company executives, investors and analysts before the market opened on Wednesday.

The statement explained "no additional information was disclosed to conference call participants beyond that which was set out in the ASX release Retirement of Chief Executive Officer issued to the Company Announcements Office on 10 March."

Morgans analysts Josephine Little and Fiona Buchanan said the unexpected retirement of the highly respected Shaw as a “major surprise”.

In a note to investors the pair wrote "while Greg’s replacement comes with an impressive bio and a wealth of experience in adjacent fields, a lack of operational leisure experience leaves us cautious.

“This, in addtition to a questionable new health club strategy and an elevated PE (price to earnings ratio), sees us downgrade (our recommendation on the stock) to Reduce.”

Thomas, the former editor of Cleo and The Australian Women’s Weekly, joined the board of Ardent in 2013.

Greg Shaw (left) is leaving Ardent Leisure after 13 years, being replaced as Chief Executive by Deborah Thomas (right).

Ardent’s assets include Dreamworld and WhiteWater World theme parks on the Gold Coast, Goodlife Health Clubs, AMF and Kingpin Bowling  centres and its high performing Main Event FEC division. 

In a statement on her appointment to her new role, Thomas thanked Shaw for his hard work in growing the company.

Thomas stated “Greg has built a great platform of assets and management team on which I will build, with a strong focus on marketing, customer service and product innovation across all of our facilities."

Shaw joined the then Macquarie Leisure Trust Group in 2002, which later evolved into Ardent Leisure.

Ardent Chairman Neil Balnaves said over the past 15 months Thomas has developed a thorough understanding of the Ardent’s diverse portfolio of businesses.

Balnaves stated "the group’s future will be increasingly focused on positioning our businesses to deliver world class customer entertainment and leisure experiences, to maximise organic revenue and profit growth opportunities."

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