The No. 2 exhibition chain likes the early results from its initiatives to make moviegoing more comfortable, engaging — and expensive. AMC Entertainment says today that it will add $38.8M to its capital expenditures for 2014, on top of the $200M already budgeted, to speed its efforts to install recliner seats, build out its line of MacGuffins bars and add Imax screens. “Our board and our team are hitting the accelerator on what our guests have told us works,” CEO Gerry Lopez says. “These innovations are increasing the productivity of existing assets, improving revenue per customer visit and driving shareholder value.”
Industry execs and investors have been impressed with the return from AMC’s initiative to cut the number of seats in some venues by as much as two-thirds to accommodate cushy recliners for moviegoers who pay premium ticket prices. Stifel analyst Benjamin Mogil says today that AMC’s strategy should enable the chain to “outperform its domestic peers in 2015,” when box office sales are expected to soar with sequels to blockbuster franchises including The Avengers, Star Wars, The Hunger Games, Mission: Impossible and more.
AMC said in December that it planned to spend $600M over five years to add the recliners. As of June it had them in 44 venues with 505 screens. Admissions revenues per screen were about a third higher than they were in locations without the recliners. At midyear, the chain also had 74 MacGuffins and 148 Imax screens.
The company assured investors that the additional capex probably won’t cut into AMC’s quarterly dividend.