Hollywood Bowl reports striking sales but profit is in the gutter after IPO and Bowlplex acquisition
Hollywood Bowl announced striking growth breaking through the £100m sales mark in its earnings for the year ended 30 September.
The figures
The UK's largest 10-pin bowling operator reported revenue increased 23.9 per cent to £106.6m this year from £86m last year.
Pre-tax profit was down in the gutter by £2.4m this year to £1.2m due to one-off exceptional costs like the acquisition of Bowlplex and its float on the London Stock Exchange earlier this year.
A total of 12.1m games were played in the financial year, compared with 10.4m in 2015, and the year-on-year average spend per game was up 6.3 per cent.
Why it's interesting
Hollywood Bowl's acquisition and integration of Bowlplex added 10 centres to the estate, bringing the total to 54, and expectations were bowled over as the rebranded centres delivered returns ahead of expectations.
Bowlplex's revenues since acquisition were £15.6m, up 9.4 per cent on prior years over the same period.
Hollywood Bowl is also in the midst of a refurbishment programme that cost the company £2.8m this year. So far, eight centres have been revamped to improve customer experience and increase returns.
The company reported a 50 per cent payback in refurbished centres in the first year as game volume increased with customers staying longer and using on-site bars and diners, chief executive Stephen Burns said.
Another seven to 10 refurbishments are planned each year, he added.
The company will open two new locations – one this month and another in April – and has more opportunities in the works for next year.
What Hollywood Bowl said
Burns is optimistic about the company's future after a "transformational" 2016.
"Bowling is regaining its share of the leisure pound," he said.
Burns said:
Listing on the stock market is an important step in the development of the business but it reflects on the strength of the business and the whole Hollywood Bowl team that at the same time we have also delivered a strong business performance.
The company is now in a key trading period for indoor leisure from October to the Easter holidays, he added.
What analysts said
Hollywood Bowl's first full-year result after its initial public offering was above expectations due to the company's organic growth, refurbishments and new openings, analysts at Investec said.
Investec upgraded its forecasts for the next two financial years by about one per cent.