Hollywood Bowl: Ten-pin bowling operator raises dividend
Bowling and leisure operator Hollywood Bowl has reported stable trading as it targets a significant expansion in the UK.
The company reported like-for-like revenue growth of 2.1 per cent in the six months ended March 31, with UK like-for-like total revenue up 1.3 per cent.
It said revenue was dented by a late Easter and the sunny, dry UK spring, which pushed Brits outside.
Group adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 0.5 per cent to £38.8m, while earnings per share fell 11.6 per cent to 13.6p.
Despite the slower-than-expected revenue growth, Hollywood Bowl raised its interim dividend by three per cent to 4.1p.
The company also has a significant capital investment program, with investment in expansion rising more than 50 per cent year on year to £14.1m.
Hollywood Bowl targets expansion
Hollywood Bowl currently operates 90 centres in the UK and Canada, with 75 of those in the UK, although it is targeting 130 by 2035.
It opened three new centres in the first half of the year, with Reading and Uxbridge scheduled to open during the second half of the financial year.
All of the centres opened in the first half are “trading in line with expectations”, the company said, and are expected to achieve at least a 19 per cent return on investment.
It has also targeted refurbishments, with four refurbishments completed in the first half of the year. The revamped centres have an average return on investment of 33 per cent.
However, Robinhood analyst Dan Lane suggested more money could be pumped into expansion rather than going to a higher dividend.
“The attractive dividend and buyback plans might frustrate investors who look at the success so far in Canada and wonder if that cash could be put to good use instead of returning it to shareholders,” Lane said.
“The same goes for the rising dividend – there looks to be a good window of opportunity in North America and all newly opened UK centres are expecting an ROI of 19 per cent. Pumping cash into new sites feels like a better use of the cash pile.”
CEO Stephen Burns said: “Investment in new centres, our refurbishment programme and customer experience continue to deliver excellent returns and record customer satisfaction scores.”
“Looking ahead, we’re well positioned for the key summer holiday period, and we remain confident that full-year [earnings] will be within the range of current analyst forecasts.”