the times | Saturday April 30 2022 53
Business
Nick Varney is to retire as chief
executive of Merlin Entertainments
after 23 years running the theme parks
and visitor attractions group.
The Legoland and Madame Tus-
sauds operator said it was beginning a
search for a replacement for Varney,
who turns 60 in November and will
serve a 12-month notice period.
Varney has run the group since 1999,
when he led the management buyout of
Vardon Attractions, then a small, UK-
focused company that owned the Sea
Life aquariums and the London and
York dungeons. He has transformed
the business into one of the world’s
biggest entertainment groups with 140
attractions, 23 hotels and half-a-dozen
holiday villages. Merlin Entertain-
ments’ underlying earnings rose from
£7 million when the group was formed
to £569 million before the pandemic.
Varney’s record was marred by the
crash at the Smiler rollercoaster at
Alton Towers in 2015, which resulted in
five people being seriously injured —
including two young women who each
had to have a leg amputated. Merlin
Entertainments was fined £5 million
over “catastrophic” safety failings
ahead of the accident.
More recently the company had to
weather the impact of the pandemic,
which forced the closure of most of its
sites and prompted it to warn of
uncertainty over its future. After falling
to a loss in 2020, last year it bounced
back to a £376 million underlying profit.
“Merlin has been my life for most of
my career,” Varney said yesterday. “I
love the people, the attractions, the
visitors and the industry and I am
proud to have played my part as we
built Merlin into an incredible
business.”
He said he had decided the time was
right to retire as the group was “recov-
ering well” from the pandemic, his 60th
Merlin wizard
Varney to retire
23 years after
taking charge
Emily Gosden birthday was approaching and Merlin
had opened several new attractions, in-
cluding “two of the biggest ever capital
projects the company undertook, Lego-
land New York and Legoland Korea”.
He joined the industry as marketing
director of Alton Towers in 1990 after
stints at Rowntree and Reckitt, then
joined Vardon Attractions in 1995
before the management buyout. Merlin
Entertainments was bought by Black-
stone, the private equity group, in 2005
and expanded through the acquisitions
of Legoland and then The Tussauds
Group, which owned Alton Towers.
Merlin was listed in 2013 but was
taken private again in 2019 in a £6 bil-
lion deal by Blackstone, Kirkbi, which
owns the Lego toy empire, and the
Canada Pension Plan Investment
Board. Varney said he had found “the
public markets were becoming increas-
ingly short-term” in focus. “For a com-
pany like Merlin that does undertake
long-term, capital-intensive projects,
the public market in the end wasn’t the
right place to be.” He reinvested in the
business after it was taken private but
declined to disclose his stake.
Varney said the “terrible accident” at
Alton Towers had been “a very difficult
time for me and the company”. He was
thrust into the public eye and faced
calls to resign. “I think we handled it as
well as we possibly could: we took
responsibility and liability early on,
apologised, did what we said we would
do with regard to the people that were
injured,” he said.
Varney is preparing to take up a non-
executive role at Marston’s, the brewing
and pubs company, and serves as a non-
executive of Bath Rugby.
He may also make time to go back to
some of his favourite Merlin attrac-
tions. “I love going through things like
the London Dungeon shows. Nemesis
at Alton Towers, which I launched as a
callow marketing director back in 1994,
is still one of my favourite rides,” he said.
A third profit warning in six months, a
delay in publishing its results and
notice that its founder would start
selling shares delivered a triple blow to
AO World and its investors yesterday.
Shares in the online electricals
retailer tumbled by more than 20 per
cent at one stage before closing down
13 per cent, or 11½p, at 76p, valuing a
company that floated at £1.2 billion in
2014 at about £364 million. The shares
have lost three quarters of their value in
the past year.
AO World, which sells laptops,
fridges and washing machines, warned
that its revenues and profits would be
lower, with adjusted earnings this year
expected to be £8 million, compared
with the range of £10 million to £20 mil-
lion that it had forecast in November.
“In view of the volatile market condi-
tions, inflationary cost pressures and
logistical challenges in the supply
chain, together with the escalating cost
of living for consumers, we remain
cautious about our revenue and profit
outlook in the near term,” it said.
The company added that it had
already been hit by customers cancel-
ling warranty policies — a significant
profit driver for the business — in
response to the soaring cost of living.
The retailer was already struggling
with availability issues caused by lock-
downs and jams at ports in Asia and-
Britain owing to a shortage of shippingreported revenues in the first quarter of
the year of £625 million, a like-for-like
increase of 25 per cent. It said that there
had been “further increases [in infla-
tion] in early 2022 as our suppliers have
passed on steeply increasing energy
costs in manufacturing.”
Kingspan, the cladding company,
said its sales were up 31 per cent on an
underlying basis in the first quarter of
the year, but by 47 per cent accounting
for inflation.
Peel Hunt, the broker, said the
industry was having a tough ride from
investors, with housebuilders’ stocks
down 26 per cent in the past three
months, materials suppliers 16 per cent
off and builders merchants 22 per cent
down against a fall in the all-share
index of just 1 per cent. “Trading across
the sector is still robust, but the market
is discounting a slowdown we are not
seeing yet,” Peel Hunt said.Construction suppliers warn
inflation pressure is building
Robert Lea Industrial EditorSetbacks take heavy toll on AO World
containers and drivers. Higher freight,
fuel, energy and wage costs are adding
to the pressures of the business.
The Bolton-based company said that
the complexities surrounding a review
of its German business meant that it
would be delaying its final results by six
to eight weeks. AO World said in
January that, after years of trying to
crack Europe’s largest economy, it
would now consider exiting the
German market. It pulled out of the
Netherlands in 2019.
It also surprised investors by
announcing that John Roberts, 48, its
founder and chief executive, had “now
decided that he will dispose of a small
portion of his equity holding on an
annual basis”. It is unusual for directors
to trail planned share sales. Roberts,
who owns a 22.3 per cent stake in the
retailer, is expected to dispose of £5 mil-
lion of shares this financial year, about
5 per cent of his total holding. It is
understood that he wants to diversify
his investments.Ashley Armstrong Retail Editor
Suppliers to the construction industry
are passing sharp rises in the cost of raw
materials on to customers, but while
demand remains robust the City fears
that a pushback on price from buyers
could lead to a downturn in the sector.
Yesterday Travis Perkins, the build-
ers’ merchant, indicated that cost infla-
tion was at 12 per cent year-on-year as
it announced revenues up nearly 18 per
cent for the first quarter of the year.
“The group’s forecast for materials
price inflation, originally expected to
ease into the second half of the year, is
now more uncertain, with pricing likely
to form a higher proportion of sales
growth across the year than previously
thought,” the company said.
SIG, the roofing and insulation
group, indicated that inflation on its
goods was running at 19 per cent as itAO World share price
2015 16 17 18 19 20 (^2122) Source: Refinitiv
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Profile
W
hen Nick
Varney was
approached
about
becoming Alton Towers’
marketing director in
1990, he was about to
move to Italy with
Reckitt, the company
best known for its
cleaning products (Emily
Gosden writes). “My
then-new wife was
thinking life in Milan was
beckoning. We ended up
in the Midlands.”
For Varney, trading
Windolene for theme
parks was an easier sell.
“I’d been to Disney as a
kid... and just the
thought of working in the
environment where your
customer is actually
immersed in the brand,
you can see your
customers coming down
the street, coming in on
the monorail as it was at
Alton Towers, see the
experience that you’re
delivering to them...
From the very first day
the industry was in my
blood.”
More than three
decades later Varney says
his passion is
undiminished. “Even on
Wednesday this week I
was at Thorpe Park,
marching around the
park, dragging the team
on to rides to see whether
we were delivering the
experience we should be.
I love that element of it.”
Yet with his 60th
birthday looming he
decided it was time to
retire from his “pretty
full-on” role and spend
more time with his
family, including looking
after sheep and donkeys
on their smallholding in
Dorset. “It’s 32 years [in
the industry] and 23 years
chief executive, which I
reckon is a pretty good
innings. I promised my
wife I’d retire at 55. I’m
not sure I’d survive
leaving it beyond 60.”
i t th
MADAME TUSSAUDS
Merlin Entertainments acquired the Tussauds Group after being bought by Blackstone in 2005. Below, Nick Varney in 2009