Lady Luck owner’s stock falls on earnings warning

Friday, July 27, 2001 | 10:41 a.m.

Isle of Capri Casinos Inc., owner of the Lady Luck hotel-casino in downtown Las Vegas, said it expects first quarter earnings of just 10 cents per share versus 33 cents in the year-ago quarter because of bad weather and market softness at some of its properties.

The company, based in Biloxi, Miss., said it expects to report cash flow for the quarter ending Sunday in the low $50 million range vs. $57.6 million in the year-ago quarter.

Cash flow, or EBITDA, is a commonly used measure of casino profitability. It is usually described as earnings before interest, taxes, depreciation and amortization.

"The company continues to experience market softness in Lake Charles and Bossier City, La.; Lula, Miss., and downtown Las Vegas -- which management believes is partially due to the softening economy," Isle of Capri said in a statement Wednesday.

"Additionally, the Lake Charles property, while continuing to maintain market share, has been adversely affected by tropical storm Allison, low table hold and the additional 3 percent gaming tax," Isle said, adding its Davenport and Marquette, Iowa, riverboat casinos were hurt by flooding during the quarter.

"The company continues to believe that its properties will show improving results for the remainder of the year as a result of implementing its slot enhancement program, revenue ramp-ups at Kansas City and Lula, flood insurance recoveries in Iowa and continued focus on cost containment and reduction despite the continuing softness in the economy," Isle said.

Isle stock closed Wednesday at $9.58, down 41 cents or 4.1 percent.

It closed Thursday at $8.45, down $1.31 as investors digested news of the earnings shortfall and as Isle stock was downgraded from "strong buy" to "hold" by CIBC World Markets, from "attractive" to "neutral" by Bear Stearns and from "hold" to "add" by Dresdner Kleinwort Wasserstein.

The stock traded down another 30 cents this morning.

Isle in 2000 bought Lady Luck Gaming Corp., which included the downtown Las Vegas hotel-casino by that name.