- First half revenue up 8%
- Strong pipeline of new centres
- Good progress in Canada
The UK and Canada’s largest tenpin bowling group Hollywood Bowl (BOWL) said first half revenue increased 8% to a record £119.2 million as UK revenue tipped over £100 million for the first time.
The shares dipped 1.3% to 331p in a tough session with the mid-cap FTSE 250 index in the red to the tune of 1.5% after a sell-off in US equities as investors pared back interest rate cut expectations.
Over the last year, shares in Hollywood Bowl are up by nearly a third compared with a flat performance for the FTSE 250.
WHAT DID THE COMPANY SAY?
Chief executive Stephen Burns commented: ‘We are pleased with the strong trading performance achieved in the first half of the year, particularly in the context of a very strong prior year comparative. It reflects the continued demand for high quality, great value and fun leisure activities that families, friends and colleagues can enjoy together.
‘We continue to work hard to evolve our value-for-money customer proposition, including investment in innovation, technology, and sustainability programmes. Our strong cash position means we are well placed to continue to invest in improving and expanding our portfolio, both in the UK and Canada, and continue to create value for all our stakeholders.’
STRONG GROWTH PIPELINE
UK like-for-like revenue was up 1.3% in the first half to March 2024 against a tough prior year comparative which saw 3.5% growth. Reported revenue grew 4.4% to £103.3 million.
In Canada, where the group operates 11 centres, like-for-like revenue increased 8% in the bowling business and 4.6% including Striker Bowling Solutions.
Two centres were acquired in the period and the company announced plans to open in Ottawa and Calgary in the 2025 financial year.
In the UK, following the acquisition of Lincoln in October 2023, Hollywood Bowl expects to open four centres in the both the current and next financial years to 30 September.
WHAT THE EXPERTS ARE SAYING
Berenberg analyst Jack Cummings left his forecasts unchanged but retained a positive view on the company, commenting: ‘With its market-leading position in the UK and the growth opportunities available to it in Canada, alongside the continued cash flow generation of the business and the success of its refurbishment and new centre opening strategy, we remain confident in the outlook for Hollywood Bowl.’
Greg Johnson at Shore Capital maintained his current year estimates which call for flat EBITDA (earnings before interest, tax, depreciation, and amortisation) against tough comparatives.
Looking ahead, Johnson expects continued ‘robust’ growth driven by 2% to 3% like-for-like revenue growth and new site openings.
‘We see significant value creation over the medium term as its pipeline builds out, profitability builds, and cash is returned to shareholders’, he added.
