The prospects for five-a-side football centre operator Goals Soccer Centres (GOAL:AIM) continue to look grim after it says increased competition from new grant-aided full size pitches is having a significant impact on the business.
Like-for-like sales fell 6.3% in 2015 while underlying pre-tax profit plummeted by 21.7% to £8.3 million, sending the shares 6% lower to 109.5p.
Although the US business performed well, with like-for-like sales up 8.4%, the UK suffered a 6.7% drop in sales driven by a significant downturn in the second half, when sales plunged by 11.5%.
Goals says it has seen rising competition from new grant-aided full size pitches on school and local authority sites. These sites can charge lower prices because they don’t invest capital in providing their own facilities.
The company says it doesn’t intend to open new sites in the UK ‘for the foreseeable future’.
In a double whammy for investors, the group isn’t recommending a final dividend due to the downturn in sales in the second half.
Goals issued a series of profit warnings last year which it blamed on poor weather conditions. This now looks unfounded, as Goals admits the number of people playing football in England has risen and twice as many are opting for five-a-side rather than 11-a-side games. Players are clearly choosing to go elsewhere.
The only hope is that Goals’ new executive chairman Nick Basing, the former CEO of bowling group Essenden, can turn around the UK operations. Basing expects to complete his strategic review of the business before the annual shareholder meeting in May.
Canaccord Genuity has cut its target price from 140p to 135p, implying 23% upside from the current share price.