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GAMING:

Wynn Resorts posts $33M loss for first quarter

Falloff attributed mostly to 8.7 percent revenue decline at Wynn Macau

Image

Steve Marcus

The Encore is shown to the left of the Wynn Las Vegas on the Strip.

Updated Tuesday, May 5, 2009 | 9:41 a.m.

Wynn Resorts Financial Information

  2Q 2009 2Q 2008 % Change 1Q 2009
Revenue $723.3 million $825.2 million -12.4% $740 million
Net income $25.5 million $272 million -90.6% ($33.8 million)
Net income per share 21 cents $2.42 -98.7% (30 cents)
Click to enlarge photo

Steve Wynn

Wynn Resorts Ltd. today reported first-quarter losses and lower revenue over last year, but company executives say they’re cautiously optimistic that business is starting to pick up.

The Las Vegas-based company, which operates Wynn Las Vegas and Encore on the Strip and Wynn Macau in Asia, reported a loss of $33.8 million, 30 cents a share, on revenue of $740 million for the quarter ending March 31. That compared with earnings of $46.7 million, 41 cents a share, on revenue of $778.7 million in the same quarter a year ago.

The company attributed most of the falloff to an 8.7 percent decline in revenue at Wynn Macau. The property’s occupancy fell from 88.5 percent last year to 83.3 percent in 2009 and revenue per available room fell from $244 to $223. The company still plans to open the 400-suite Encore at Wynn Macau in May 2010.

In Las Vegas, net casino revenue in the first quarter was $117.5 million, compared with $125.1 million for the first quarter of 2008. Occupancy at the Wynn properties in Las Vegas was 89.5 percent for the quarter, compared with 95.8 percent in 2008, and revenue per available room fell from $285 to $199 in the same period.

Food and beverage revenue increased 25.6 percent to $96.9 million, primarily due to the opening of Encore, but retail sales were off 13.5 percent to $19.6 million because of reduced consumer spending.

Despite the weaker results, Wynn Chairman and CEO Steve Wynn said he was “cautiously optimistic that we have seen the bottom” of the tanking economy.

Wynn based his optimism on booking windows that have expanded since the middle of last year. He explained that the typical booking window is 70-90 days, but last year that dropped to around 30. But in April, he said it went back to 60-90.

“I’m still going to be a little reticent,” Wynn said in a conference call with investors this morning. “I think the economy is bounding around. I don’t know whether the stimulus package has taken effect or whether it is effective.”

He said he isn’t quite as ebullient as his competitors at MGM Mirage, who reported results Monday and expressed similar optimism.

“If (MGM Mirage executives) Jim Murren and Bobby Baldwin think it’s bottoming out, maybe it’s true. I hope it is,” he said.

Wynn said there also have been indications of a return to more traditional consumer behavior after months of sitting on the sidelines.

“People will resist change and want to go back to their normal behavior,” Wynn said. “They want to do what they always did.”

He cited recent weekends in Macau and Las Vegas that had robust activity and spending.

Wynn also said the company is starting to see some of the benefits of its cost-cutting measures on the bottom line, noting that the company took a “share-the-pain approach” by trimming salaries and bonuses instead of laying employees off.

Wynn also took time in the call to get political, urging President Obama to address travel and tourism issues and chiding inexperienced government officials for making statements that led to the downturn of travel to several U.S. cities, including Las Vegas. He praised Obama for his quick reaction to stimulating the economy, but said he needs to be more efficient in heading off the jobless rate.

“Consumer confidence a very important factor in the way people plan trips and meetings and travel,” Wynn said. “As long as people remain frightened, the money stays on the sideline.”

Wynn also downplayed reports that he is interested in acquiring the Bellagio from MGM Mirage. He said he would be a buyer only if the price and opportunity is right and that he hasn’t even made an offer for the property he built and gave up when MGM and Mirage Resorts merged in May 2000.

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Wynn Resorts at a glance

+ Wynn Resorts operates the Wynn Las Vegas and Encore on the Las Vegas Strip and Wynn Macau in Asia.

- Encore opened in December so first-quarter 2008 results do not include those revenues and expenses.

- The average daily room rate for the quarter was $222 compared with $298 for the first quarter of 2008.

- In Las Vegas, net casino revenue in the first quarter was $117.5 million, compared with $125.1 million for the first quarter of 2008.

- In Macau, net revenue was $448.7 million compared with $491.5 million in the first quarter of 2008.

- Wynn stock hit 52-week lows March 2 ($17.65), March 3 ($16.93) and March 4 ($15.61).

+ May 4 stock price: $42.81 (52-week range: $14.50-$119.74)

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