11th Apr 2023 12:32
(Alliance News) - Despite mounting cost-of-living pressures on its customers, ten-pin bowling operator Hollywood Bowl Group PLC reported on Tuesday solid interim revenue growth amid strong consumer demand.
"There is a misconception that consumers stop spending completely when the economic outlook deteriorates," commented Russ Mould, investment director at AJ Bell.
"They might find ways to save money by trading down to cheaper alternatives, but that doesn't mean leisure activities grind to a complete halt. 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. That explains why tenpin bowling operator Hollywood Bowl has managed to achieve record revenue for the six months to 31 March."
The Hertfordshire, England-based firm said revenue in the half-year ended March 31 was up 11% year-on-year to a record GBP111.1 million from GBP100.2 million a year prior.
It noted "continued strong customer demand", with like-for-like revenue growth of 3.5%. Analysts at Berenberg said this growth was ahead of their expectations and was "impressive" in light of the uncertain macroeconomic environment.
"Our view in a nutshell: Hollywood Bowl is a top pick in the leisure space," Berenberg asserted.
"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: we increase our estimates and price target to 360 pence and reiterate our Buy rating," the German bank said.
Shares in Hollywood Bowl were up 1.8% at 250.00p on Tuesday afternoon in London. The stock is down 8.8% over the last 12-months.
Berenberg continued that while it remains "mindful of the ongoing economic backdrop", given Hollywood Bowl's stronger than expected first half update, it is increasing its full-year sales, earnings before interest, tax, depreciation and amortisation, and earnings per share estimates by 6%, 3%, 6%, respectively.
In the year ended September 30, 2022, the company reported revenue of GBP193.7 million, adjusted Ebitda of GBP77.5 million and basic EPS of 21.91p.
Analysts Douglas Jack and Ivor Jones at Peel Hunt, meanwhile, left their forecasts for the firm unchanged "in light of management's prudent comments on the 'ongoing economic backdrop'".
Hollywood Bowl said it is confident of its prospects for financial 2023 as a whole. It said it expects to announce its interim dividend alongside its half-year results in May.
"Our highly cash generative business model and insulation from cost of goods and energy inflationary pressures, leaves us well-placed to continue to expand and invest in our portfolio, both in the UK and Canada," said Chief Executive Stephen Burns.
Hollywood Bowl's interim results will be released on May 30.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Hollywood Bwl