Leisure firm Hollywood Bowl (BOWL:AIM) reported record first half revenues and guided forecasts for full year earnings higher in a trading update on Friday (8 April 2022).
Investors gave the announcement a warm reception, bidding the stock up 7% to 280p into the weekend.
The company posted ‘exceptionally’ strong revenue growth in the six months to March, with turnover soaring 659% to a record £91.3 million.
Given the closures and impacts from Covid restrictions during 2020 and 2021, the firm also provided a comparison with 2019, showing like-for-like revenue growth of more than 25% and total revenue growth of more than 35%.
RECORD REVENUES
The firm registered four record revenue months during the half, and generated record cash from its operations.
Despite the pressure on family budgets, strong demand for high-quality yet affordable leisure activities like ten-pin bowling means Hollywood Bowl is in the sweet spot.
‘We have continued to invest in our customer experience and in the growth and quality of our portfolio of bowling and mini-golf centres. We remain confident in the enduring consumer demand for fun-filled, experiential leisure activities that offer great value for money’, said chief executive Stephen Burns.
While the company isn’t immune to inflationary pressures, labour costs account for less than 20% of sales and to keep food costs down the menu has been simplified.
Also, solar panels are being rolled out across its centres with the aim of producing up to a third of their electricity on-site, substantially reducing energy costs.
FORECASTS UPGRADED
Thanks to its better than expected first-half performance the company said it saw full year earnings ahead of expectations, prompting analysts to dig out their calculators and start raising forecasts.
Shore Capital analyst Greg Johnson upped his estimate for full year EBITDA (earnings before interest, taxes, depreciation and amortization) from £43.5 million to £46.5 million assuming the exceptional growth of the first half moderates over the coming months.
Johnson also penciled in a 7.6p per share dividend after the firm said it would reinstate a payout due to its ‘strong, sustained financial performance and significant cash generation’ since reopening.
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