Hollywood Bowl: Strike! Strong performance supported by resilient customer demand
() the UK's largest ten-pin bowling operator, released a trading update for the year ended 30th September 2022, this morning.
You would think, judging by the gloom portrayed by the media, that most families spend their evenings and weekends huddled under a blanket on the sofa, sharing own brand biscuits whilst watching the news in order to glean more information on how to save the pennies.
If Hollywood Bowl results are anything to go by, this image couldn't be further from the truth.
Financial Highlights
The group generated total revenue of £184.9m up 42.3% compared to 2019. Due to lockdowns in 2021, this year would not be a fair comparison but it's worth looking just to see the power of the bounce back they have achieved.
In 2021 their total revenue was £71.9m, so they've more increased this by 157%.
When it comes to analysing figures for companies expanding sites quickly, an important direct measure of comparison is "like to like" revenue growth, which increased by 28.3%.
This also drops through to EBITDA showing growth in excess of 40% compared to 2019, which is ahead of market expectations.
Hollywood Bowl stated, "The strong performance has been supported by resilient customer demand for experiential leisure during the year".
Due to negative sentiment around leisure companies, the group's shares have sold off in the last 5 months from 280p to 180p, a 36% drop, which is hardly justified when looking at the figures.
Outlook
You maybe forgiven for thinking that we are only part way into this cost of living crisis so it's worth looking at what the company expect to achieve going forward.
Stephen Burns, Chief Executive Officer of Hollywood Bowl, commented: "Looking ahead, we see a significant opportunity to grow our business to more than 110 centres across our three experiential leisure brands: Hollywood Bowl and Puttstars in the UK and Splitsville in Canada. Our strong balance sheet and cash generative business model, combined with our resilience to inflationary pressures will allow us to capitalise on this organic and international growth potential and continue to create value for all our stakeholders."
Positive Read Across the Consumer / Leisure Sector
If this is a good read across to other companies in the leisure sector, reporting good growth, then maybe there's some decent opportunities worth following.
() is a fast-growing company in the experiential leisure sector. It operates two types of businesses escape rooms (Escape Hunt) and social competitive gaming bars (Boom Battle Bars). It is a lot smaller in regards market capitalisation, but their recent Interim Results also point to good growth and resilience in consumer activity, whilst the share price has been hammered on negative sentiment.
For the 6 months ended 30th June 2021 they reported a 589% growth in revenue, site openings increased from just 14 Escape Rooms a year ago to currently 21 owners operated sites, more than 25 franchises plus 17 Boom Battle Bars. Their target for the end of the year is 27 Boom Battle bars including a super site in Oxford Street London. The company commented, "Recent performance across the estate has been encouraging with no discernible impact from consumer weakness".
The guidance for revenue this year is £25.3m up 261% from last year and they expect to generate £6.1m of EBITDA & £2.1m of Adjusted profit before tax. This means their current enterprise value is just 0.4 x sales and only 2 x EBITDA.
Their broker Shore Capital, covering their results, say, "We believe that investors should take heart that XPF should exit FY22F as a profitable, cash-generative group".
Regardless of media gloom, people who have disposable income, the demographic both Hollywood Bowl & XP Factory target, will still live their lives and this means leaving the sofa and shared own brand biscuits in exchange for some real-life experiences, that actually feature real fun.
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