- Record first half sales up 11% to £111 million
- Like-for-like sales grew 3.5% despite tough comps
- Brokers upgrade full year 2023 and 2024 sales and earnings
Ten-pin bowling and mini-golf centre operator Hollywood Bowl (BOWL) delivered record first half revenues which increased 11% to £111.1 million representing 3.5% like-for-like growth despite tough prior year comparisons.
Investors welcomed the positive update with the shares gaining 2% to 250.8p pushing them close to the highs seen over the last year.
Two new UK centres opened in the first half to 31 March 2023 were said to be trading ahead of management’s expectations while construction on two new centres, one at Merry Hill and a combined bowling and mini-golf centre in Colchester are expected to start in the second half.
The company is making good progress in Canada since acquiring Splitsville in May 2022, its first foray overseas with three entertainment centres added in February 2023 and recently exchanging on a new bowling centre in Ontario.
BROKER UPGRADES
Leisure analyst at Investec Roberta Ciaccia called the like-for-like sales increase ‘exceptionally strong, given the economic backdrop and very tough comps.’
Ciaccia increased her 2023 sales and earnings per share forecasts by 7% and 10% to £198 million and 19.3p respectively.
‘For FY23E, we had estimated a 5.7% decline in UK LFL, which now clearly looks way too low. As such, we now expect LFL to be broadly flat in FY23E and, with a series of school holidays still ahead of us, there may be upside to this number too.’
Berenberg also increased its FY 23 sales and earnings per share forecasts by 6% apiece and upped its target price to 360p:
‘With its market-leading position in the UK and the growth opportunities in Canada, 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.’
OTHER EXPERT VIEWS
Investment director at AJ Bell commented: ‘If life is hard, it is nice to have a few little treats and things like going to the cinema or for a few games of bowling are deemed affordable luxuries.
‘With the cost-of-living crisis still biting, consumers are watching every penny. Equally, the stress of life means it is important to unwind with friends and family and bowling is a fairly cheap way to have some fun without breaking the bank.
‘Having mastered the act of running bowling centres in the UK, the company’s game plan now involves rolling out that business model across Canada while also adding mini golf sites to its homeland territory.’
Disclaimer: Financial services company AJ Bell owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Steven Frazer) own shares in AJ Bell.
