- Strong summer sees 12.8% like-for-like sales growth
- On track to open four new centres
- Interim dividend hiked 16.7%
Tenpin bowling and family entertainment company Ten Entertainment (TEG:AIM) said strong summer trading saw an acceleration in like-for-like sales growth driven by its value-for-money proposition.
The shares nudged up 2% to 290p on the news, taking gains to more than 50% over the last 12 months.
Ten Entertainment has held bowling prices at pre-pandemic levels with the average price per game an affordable £4.90. Like-for-like sales are 46% above 2019 levels, driven by over 40% volume growth supplemented by increases in food and drink and other entertainments.
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The company said its simple model is a winning formula that continues to deliver results by providing ‘the best quality bowling experience anywhere in the UK at the best value for money, supplemented by a wide variety of additional leisure activities’.
STRONG FIRST HALF
Sales in the first half to 2 July increased 3.3% to £65.3 million with like-for-like sales up 1.6% driven by increased footfall. Trading accelerated during the summer months with like-for-like sales up 12.8% in the subsequent 10 weeks to 10 September, bringing year to date growth to 4.7%.
Management said it is confident of delivering mid-single digit growth for the full year.
Adjusted pre-tax profit was up 0.6% to £15.8 million on a reported basis, but grew 15.3% excluding one-off Covid benefits.
Ten Entertainment has opened three new centres in 2023 with a fourth due to open in December, with new sites hitting or exceeding the targeted 30% return on investment.
INCREASED FINANCING AND HEDGING
The company continues to grow from internally generated cash and ended the period with net cash of £5.1 million. It also increased its revolving credit facility to £30 million from £25 million and extended the term by three years from the previous expiry in April 2024.
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The interim dividend was increased by 16.7% to 3.5p per share. Ten Entertainment has also locked-in energy prices to September 2026 at a more competitive price than originally planned.
The new contract using 100% renewable energy costs £1.8 million more than the current contract but is significantly lower than the £5 million expected.
EXPERT VIEWS
Liberum nudged up its 2023 adjusted pre-tax profit forecast by 2.1% to £28.8 million. Analysts Anna Barnfather and Nishant Dahad said: ‘The structural shift in consumer spending towards low-cost family entertainment has endured the cost-of-living crisis.
‘This, combined with Ten Entertainment’s on-going programme and investment, has seen it consistently beat expectations.’
Analysts Douglas Jack and Ivor Jones at Peel Hunt (PEEL:AIM) kept their earnings estimates unchanged but noted the company is trading above their sales growth assumptions.
‘Overall, we believe there is upside to forecasts and valuation. Regardless of the economic backdrop TEG should be well placed to continue growing due to its low-cost base, its increasingly attractive value for money proposition, and its net cash position.’
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