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Hollywood Bowl pinned down by pandemic

The tenpin bowling operator’s profits were almost wiped out during 2020
December 14, 2020
  • Full-year operating profit plunged by close to two-thirds to £10m
  • But pent-up demand saw a better-than-expected performance in August and September

Reflecting a five-month closure of its estate during lockdown and a restricted re-opening from mid-August, Hollywood Bowl (BOWL) suffered a collapse in operating profit collapse of almost two-thirds in the year to 30 September.

Yet it was not all bad news. Pent-up demand for leisure activities saw a better-than-expected performance across August and September, with like-for-like revenue coming in at two-thirds of prior year levels. The majority of locations filled the permitted 50 per cent lane capacity at peak times, with average customer spend increasing by 5 per cent.

Net debt (excluding lease liabilities) has more than quadrupled to £8.7m, although further damage was prevented through rent deferrals, an £11m equity placing and government financial support.

Looking ahead, the group is hopeful of a “gradual return to more recognisable market conditions in 2021” and still plans to open an average of two centres per year from the 2022 financial year. It is worth looking beyond the near-term earnings pressure to the long-term potential of its expansion and upgrade plans. Buy.

HOLLYWOOD BOWL (BOWL)  
ORD PRICE:192pMARKET VALUE:£ 302m
TOUCH:189-192p12-MONTH HIGH:312pLOW: 70p
DIVIDEND YIELD:NILPE RATIO:213
NET ASSET VALUE:47p*NET DEBT:£182m
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20161052.601.100.19
201711421.112.25.75
201812123.912.56.26
201913027.614.97.43
2020801.200.90nil
% change-39-96-94-
Ex-div:na   
Payment:na   
*Includes £78m in intangible assets or 50p a share

Last IC view: Buy, 157p, 17 Jul 2020