Shares in Hollywood Bowl (LON:BOWL) rallied to a three-month high after the ten-pin bowling operator reported record H1 sales. This result reflected continued strong demand for its affordable leisure activities in both the UK and Canada.
Investors also welcomed the launch of a fresh £5 million share buyback and an outlook statement pointing to a positive H2, with Hollywood Bowl sounding confident of meeting FY26 consensus expectations.
Profitable growth
The FTSE 250 bowling operator, which also runs mini-golf centres, racked up a 9.5% rise in total revenues to a record £141.5 million in H1. UK sales rose 9.4% to £118.4 million and revenues in Canada grew 12.8% to C$42.9 million or £23.1 million.
Despite ongoing pressure on household budgets, group like-for-like sales grew 2.3%, with UK like-for-likes up 2.6% thanks to an increase in spend per game. Like-for-likes in Canada edged up by a more modest 0.5% as snowstorms derailed performance.
Tight grip on costs
Even after absorbing higher operating costs, Hollywood Bowl’s adjusted pre-tax profits increased 8.1% to £32.1 million in H1, demonstrating the resilience of the business model.
CEO Stephen Burns commented: ‘Looking ahead, we are confident in delivering on expectations for FY26, as customer appeal for our value offer remains robust, and we continue to maintain a tight grip on costs.’
Burns added: ‘We have an exciting pipeline of centres for H2 and expect this to accelerate in FY27 and beyond, positioning us for sustainable profitable growth over the long-term.’
Following the results, Cavendish reiterated its ‘buy’ recommendation and 380p price target. ‘Overall, this morning’s update should reassure investors, with progress on like-for-like sales, profitability and additional shareholder returns,’ said the broker.
Cavendish expects the focus in H2 will be on any changes to UK discretionary spend and consumer confidence.
‘However, elevated jet fuel prices may increase staycations in the UK and encourage families to turn towards bowling as a summer activity. This may present an opportunity for Hollywood Bowl, with its leading position as the best-value-for-money branded bowling UK operator.’
We remain fans of Hollywood Bowl, whose resilience stems from the provision of value-for-money, family-friendly fun.
The cash generative business pays a progressive dividend and remains well protected from inflationary shocks given its high gross margins, and is 76% hedged on electricity through to the end of FY29.
A robust balance sheet gives Hollywood Bowl the firepower for further expansion in the UK and Canada. Hollywood Bowl is the largest branded operator in a highly fragmented Canadian market, leaving it well positioned to capture future growth opportunities.
Read the press release here: https://www.hollywoodbowlgroup.com/investors/
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