Regal Entertainment Group, the largest U.S. cinema operator, reported a second-quarter profit Thursday that missed analysts’ expectations.
Shares of Regal, based in Knoxville, Tenn., fell 97 cents, or 7%, to $12.94. The shares have gained 27% this year.
Second-quarter profit of 26 cents a share missed the 31-cent average estimate of analysts in a Bloomberg survey. The company reported higher-than-expected theater operating costs and expenses for closing underperforming theaters, said Chris White, an analyst at Wedbush Morgan Securities in Los Angeles.
“This is something I don’t think most people were factoring in,” White said. “They said a higher percentage of their theaters became Imax or 3-D enabled. The rent associated with those screens is higher.”
Profit rose 67% to $40.5 million from $24.3 million, or 16 cents a share, a year earlier, Regal said. Sales gained 17% to $789.2 million, beating the $779.9-million average analyst estimate as films including “Transformers: Revenge of the Fallen” and “Up” lured more people to theaters.
Though Regal is selectively interested in the 60 theaters put up for sale by Sumner Redstone’s National Amusements Inc., it doesn’t want the underlying real estate, Chief Executive Amy Miles said. .
“We’re not real estate developers,” Miles said. National Amusements “has some assets that are very attractive. I just think it’s premature today to speculate whether any of those assets would be available on a selective basis.”