Turbulent start for Ardent Leisure CEO Deborah Thomas

After becoming Ardent Leisure CEO last April, Deborah Thomas was asked if she knew how to operate a roller coaster.

Deborah Thomas

Not long after she took over as chief executive of Ardent Leisure last April, former Women’s Weekly editor-in-chief Deborah Thomas was asked if she knew how to operate a roller coaster.

“It was one of those questions which indicated the misconceptions around me and why I was brought into the company,” she told The Weekend Australian this week. “My response was that I am not here to operate the roller coaster; I am here to make sure that people queue up and want to spend their money to take a ride on it.”

Last March, when Thomas was announced as CEO of the leisure group, which owns the Dreamworld and WhiteWater World theme parks, Goodlife Health Clubs, AMF Bowling centres, d’Albora Marinas and a growing number of Main Event bowling and leisure centres in the US, the company’s share price plunged by almost 30 per cent on the day.

Former chief executive Greg Shaw had left suddenly and Thomas was seen as not having the corporate experience to run a listed group, despite the fact that she had been on the board for two years and was well known to the company’s directors.

After some 10 months in the job, Thomas is still on a rollercoaster, if the share price is any guide.

Ardent’s shares rose to $2.87 in early November but, despite delivering strong underlying earnings for the half-year to December, its shares were down to $1.74 by the end of this week.

Thomas still has her critics, but Ardent chairman Neil Balnaves is an even stronger supporter than when he appointed her last March.

“She has stopped the rot,” he says. “She has done a hell of a job in building the company. She has done an extraordinary job in just 10 months in creating a substantial turnaround.

“Dreamworld has never had more visitors in its history. We have stepped up the expansion of the US operations, which have a return on investment of 35 per cent. She has brilliant interpersonal skills which have benefited the company.

“Deborah had the full support of the board and is well on the way to delivering a turnaround of the company.”

Thomas has been quietly bringing her marketing experience in Kerry Packer’s Consolidated Press magazine group to the range of consumer-facing businesses in the Ardent Group.

Ardent’s half-yearly results for the six months to the end of December show a 5.1 per cent fall in core earnings to $30.5m, a figure that takes into account pre-opening expenses of new centres, a $1m one-off expense involved with refinancing the group’s debt facilities last August, depreciation, gains on the sale and leaseback of family entertainment centres in the US and business acquisition costs.

But the group’s underlying trend is shown by the 16.8 per cent increase in revenues to $333.8m over the half, a 10.6 per cent rise in core earnings before interest, tax and depreciation to $63.8m and a 20.4 per cent increase in statutory profit to $22.7m.

“The reason I am here is that I have a very strong focus on the customer and, at head office, that’s something we really haven’t had,” Thomas says.

“We have 17 million customers and many of them are women. It is family entertainment and it is often the women who are making the decisions around what they want to do and how they want to spend their leisure time with their families.

“That’s the expertise I bring to the team.”

Thomas admits she does not have a financial background but argues that her extensive experience in reaching out to the mass-market female audience is a strength in a company like Ardent.

“It is a team and everyone brings different things to the table,” she says.

“I think I am a pretty good people person. Editing a magazine is a team effort.

“The skills I have are about making sure our chief executives are really charged up and positive and excited about the potential of their business.”

Changes under her watch have included stepping up the expansion of the Texas-based Main Event entertainment centres in the US, a shift to 24/7 opening times for the Goodlife gyms, extended trading hours for Dreamworld with sound and light shows in the holidays, and an expansion of the digital capacity across the group.

AMF has expanded its online booking facilities, particularly for birthday parties, and established its own call centre, which has freed up staff to attend to customers.

Other moves have included the opening of two games centres in Sydney and plans for a new state-of-the-art centre in the Crown Entertainment Centre in Melbourne.

“I love the business and I love the customers,” Thomas says.

“I love going to our bowling centres and listening to what people are doing and saying. I want people to leave the business with Mums saying, ‘That’s the best money we have ever spent’, and the kids saying, ‘That’s the best time we have ever had’.”

She took her 13-year-old son to the evening sound and light show at Dreamworld as a paying customer and to AMF bowling alleys to get a feel for what other parents say about the experience.

Her son also accompanied her over the Christmas holidays on her third visit to the US Main Event centres.

Thomas says she now interrogates her son and his friends on their response to the centres and new games. She gave her son a school holiday project of writing a paper on the potential of virtual reality.

Balnaves says Thomas has worked well, with management of the Ardent businesses ending a period of high turnover at the top level.

Thomas says turning around the Goodlife gyms has been a challenge and credits its chief executive, Greg Oliver, with the idea of opening the centres 24/7, which helped boost customers.

With her memories still strong of Kerry Packer’s initial dismissal of the potential of the internet, Thomas says she has concentrated on the “digital transformation” of the group.

“When I sat down with Greg, we decided that you had to look at the gyms like retail businesses. Sure, they have bricks and mortar and you want to have good facilities, but we need to have a 24/7 contact with our customers in the same way that a retailer now does.”

Thomas says she has been looking for more ways the businesses can learn from each other.

The AMF bowling centres now offer Dreamworks birthday parties, an extension of the Dreamworks experience at the Dreamworld theme park.

But the most critical part of the business has been expanding its Main Event family entertainment centres, run from Dallas by Charlie Keegan.

Keegan was in town this week, explaining to investors that the Texas economy is far from being a basket case despite the fall in the oil price.

The Main Event business reported a 22.6 per cent increase in revenue to $US75.5m and a 12.9 per cent rise in earnings over the December half to $US15.1m.

But some analysts were critical of the low growth in earnings from like-for-like centres and the use of debt to fund an aggressive expansion program into other states.

Keegan argues that the Texas economy is one of the most buoyant in the US, with many US and international companies setting up offices there.

He says low oil prices have helped US consumers, giving them more dollars to spend on leisure and family activities.

The company plans to open another five centres in the US over the next six months, taking the total to 27 by June, and another eight in the next financial year.

Balnaves says the company has good access to finance for its expansion and points out that all centres opened since September 2007 are on track to deliver an average annual increase of over 35 per cent in earnings.

“I would give my back teeth to have another part of the business doing anything like 35 per cent,” he says.

He says the company would be “mad” not to use its access to 2.5 per cent financing to expand its US business.

Thomas admits she is disappointed that the Ardent share price is not higher but argues that her focus has to be on driving the business itself.

Balnaves says: “She hasn’t been there a year yet and she has cleaned up a lot of problems. When she delivers her full-year results in August people will start believing in her,” he says.

“If the company had not done what she has done over the past year I would hate to think where it would be.”