Hollywood Bowl strikes share boom to defy consumer spending fears
Hollywood Bowl shares have rocketed after the firm said Brits are prioritising nights out to the bowling alley over going shopping as they cut down on non-essential spending.
The UK’s largest tenpin bowling operator said it has seen a “robust” performance even as consumer confidence plummets amid the Iran war, sending its share price up 15 per cent to 300p.
The FTSE 250 firm notched a 9.5 per cent jump in revenue to £142m in the six months to March, while sales grew by 2.6 per cent in its UK operations.
The company’s share price soared by more than nine per cent on Wednesday morning, to 284p, leading the stock to a five per cent year-to-date gain.
Chief executive Stephen Burn said Brits are prioritising “shared social occasions over discretionary retail spend” as they clamp down on their finances.
“In this uncertain environment, our sector-leading proposition remains accessible and is underpinned by consumer trends supporting demand for affordable leisure,” he said.
Hollywood Bowl eyes expansion
Burns attributed the company’s “robust” growth to the “affordable proposition” offered by bowling, which he said can cost as little as £26 for a family of four.
In an industry particularly vulnerable to Brits’ shaky consumer confidence, chief executive Stephen Burns has committed himself to maintaining the firm’s value appeal.
But the firm saw revenue growth slow to 0.5 per cent in its Canadian operations and pre-tax profit across the group fell by four per cent to £27m in the half-year.
These figures show the business “hasn’t quite bowled the perfect game,” according to Freetrade investment writer Duncan Ferris.
“Fortunately, Hollywood Bowl’s impressive margins and healthy balance sheet give it plenty of room to manoeuvre without touching the sides,” he said.
The company is eyeing expansion in the UK, with two openings set for the second half of this year, along with four more next year, as it aims to total 95 locations by 2035.
Dynamic pricing drives takings
This comes after Hollywood Bowl reported record annual revenue of £251m in December, up nine per cent from the previous year, as the firm benefitted from the warmest British summer on record.
In its last full year, Hollywood Bowl saw like-for-like sales jump one per cent despite game volumes falling by seven per cent, as a dynamic pricing system saw spend per game shoot up by nine per cent.
The firm said on Wednesday that its “peak pricing” system is continuing to “optimise” its takings.
Hollywood Bowl saw consumers spend 7.6 per cent more per game – up to £12.77 – amid growing demand for add-ons like VIP lanes.
The business said it is on track to meet its profit forecasts because it is insulated from energy cost increases through fixed-price contracts for 76 per cent of its electricity needs.