In early trade the Ardent Leisure Group (ASX: AAD) share price has fallen 4% to $1.79 after the shock resignation of its CEO Simon Kelly. No reason has been given for the sudden resignation of the former Nine Entertainment Co Holdings Ltd (ASX: NEC) chief operating officer who leaves after less than six months in the job.
The company's chief financial officer, Geoff Richardson, will assume the role of interim chief executive officer immediately while the board promptly commences the search for a new CEO.
Mr Kelly left stating that he was pleased with the progress being made on both strategic and operational priorities, and that he remains "very positive about the potential of the Group's businesses."
But judging by the market's reaction today, investors aren't feeling as optimistic.
It isn't all bad news, though. The company has taken this opportunity to update the market on its trading thus far in FY 2018.
According to the release, Ardent Leisure is trading broadly in line with expectations for FY 2018 Core EBITDA.
Furthermore, its Main Event centres appear to be showing signs that they have turned a corner. In the 18 weeks to 31 October 2017, constant centre revenues are up 0.3% on the prior corresponding period. This rises to 1.1% when adjusted for the impact of the recent hurricanes.
And although Dreamworld trading remains challenged, the business is trading above breakeven ahead of the peak trading season over the summer months.
Elsewhere its Bowling and Entertainment business has delivered solid growth year-to-date. Segment EBITDA is up around 20% on the prior corresponding period.
Finally, the company has made meaningful progress in driving its cost base down at a corporate level. The full impact of these savings are expected to flow through in the next financial year.
Should you sell?
While it could prove to be nothing, I am concerned by the sudden resignation of Ardent Leisure's CEO. This could potentially be a sign that all is not well at the company.
But due to its improved performance, I would class Ardent Leisure as a hold at the moment and suggest investors wait to see how things develop.
In the meantime, investors may want to consider taking a look at Event Hospitality and Entertainment Ltd (ASX: EVT) instead.
