By Lina Saigol
Regal Cinemas owner Cineworld on Monday reported a strong opening weekend in the U.K., as film buffs flocked to the big screen following the lifting of COVID-19 lockdown restrictions.
The world’s second largest cinema chain said in a statement that attendance went “beyond our expectations,” led by the success of animated family hit “Peter Rabbit 2: The Runaway.” The company also saw strong concession income as moviegoers splashed out on popcorn.
Cineworld also said more than 97% of its U.S. cinemas, or 502 sites, had resumed operations, while most of its screens in the rest of the world were expected to reopen by the end of the month.
Shares in FTSE 250–listed Cineworld /zigman2/quotes/208174566/delayed CNNWF -4.79% /zigman2/quotes/206525056/delayed UK:CINE -1.80% rose 3.69% in early European morning trading on Monday. The stock has risen 40.41% so far this year, according to data from FactSet.
Cineworld, which was forced to close all of its 127 U.K. venues on Oct. 8, 2020, amid government-enforced restrictions, said it was hoping for strong results next weekend with the releases of Walt Disney’s /zigman2/quotes/203410047/composite DIS +0.58% “Cruella” and Paramount’s” A Quiet Place 2.”
In a further encouraging sign, Cineworld said it had received the full $203 million tax refund under the U.S. government’s CARES Act — a $2.3 trillion COVID-19 support package passed in March 2020. In October, the company secured $750 million in funding and debt waivers until 2022 to help it weather the pandemic.
“When combined with improving consumer confidence and the success of the vaccination rollout, we expect a good recovery in attendance over the coming months, noting the record breaking success of ‘F9’ in the Asian market,” said Cineworld Chief Executive Mooky Greidinger, in a statement.
Russ Mould, investment director at AJ Bell, said: “Cinema operators have been waiting for this moment for a long time, keeping their fingers crossed that consumers would feel confident enough to return to the big screen.”
But he noted that the “strong weekend” came as atrocious weather hit many parts of the U.K. “What happens if we finally get some good weather this weekend and from then on?” Mould said, as he warned that cinema is heavily dependent on the quality of the films available, and there aren’t that many big films lined up for release until later in the summer.
“This suggests Cineworld will still have to keep its fingers crossed that the past weekend’s trading boost wasn’t a one-off,” Mould added.
The financial toll that months of cinema closures have had on Cineworld was highlighted in March, when the company reported a record $3 billion pretax loss for 2020 , compared with a pretax profit of $212 million for 2019. At the time, Cineworld warned that cinema attendance levels wouldn’t return to pre-COVID-19 levels until 2024.
The same month, it struck an exclusive deal with AT&T /zigman2/quotes/203165245/composite T +0.50% -owned Warner Bros. to show films in movie theaters before they are streamed on its HBO Max platform.
Under the multiyear deal, Cineworld will be able to exclusively show the studio’s films in movie theaters in the U.S. for 45 days before they can be released on an on-demand streaming service.
Starting from next year, the deal also covers the U.K., where the two groups have agreed to an exclusive theatrical window of 31 days before the film goes to premium video on demand, with an extended window of up to 45 days for films that open to an agreed upon box-office threshold. In the past, the theatrical window was typically as long as 90 days.