-Record breaking first half performance
-Expansion into Canada through Teaquinn acquisition
-Dividend re-instated
The UK’s largest 10-pin bowling operator Hollywood Bowl (BOWL) reported a record first half and announced its first international foray after acquiring Canada based Teaquinn Holdings for C$17 million.
Management said the mature Canadian was market was highly fragmented with the largest operator owning 17 of the roughly 190 bowling centres.
Hollywood Bowl sees an opportunity to consolidate the market in a similar fashion to the way it has in the UK. Teaquinn operates five centres and owns a bowling equipment supplier.
A ‘quality’ management team with ambition to grow the business was a key attraction of the deal. The company sees scope to add 10 new sites over the next five years, mainly through bolt-on acquisitions.
The purchase was financed from existing cash resources, with leisure analyst Gregg Johnson at Shore Capital predicting a modest contribution in the early years.
Johnson commented: ‘We see this as a low cost and sensible approach to international expansion.’
Investors welcomed the strong trading and international expansion development and marked the shares up 4% to 247p.
STELLAR FIRST HALF
As previously disclosed, the company enjoyed record first half trading to 31 March driven by pent-up demand. Like-for-like sales grew 26.8% compared to pre-pandemic.
Excluding VAT benefits, revenues were 36% higher than the comparable period in 2019 to £91.3 million while profit after tax was 52.5% to £20.4 million.
The favourable timing of the February half-term and Easter holidays also contributed to strong trading.
Performance was strong across the board driven by higher average spend per game and higher food and beverage revenues.
A simplified food menu and 10.9% lower prices drove an 8.4% increase in revenues. Meanwhile like-for-like drinks revenues grew 22.9% supported by lane ordering technology.
INVESTING IN THE ESTATE
The company continued to invest in its estate to drive growth and improve returns on capital. On average, the seven most recent refurbishments have delivered like-for-like growth of 39.5% compared with 2019.
Two refurbishments were completed in the half and one re-brand and refurbishment, while two new centres were opened taking the total estate to 66 centres.
As previously flagged the company reinstated the first half dividend, paying 3p per share.
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