- Chief people officer Melanie Dickinson has offloaded just over £181,000-worth of shares
- The disposal follows sales by the chief executive and chief financial officers earlier this month
It will come as little surprise that Hollywood Bowl (BOWL) has endured a bruising pandemic. Thanks to a five-month closure of its estate during the first Covid-19 lockdown and a restricted opening from mid-August, the tenpin bowling operator's pre-tax profits were almost completely wiped out in the year to 30 September. While it managed to reopen around 60 per cent of its locations at the beginning of December, the group’s centres across England, Scotland and Wales have once again closed their doors.
Against that backdrop, chief people officer Melanie Dickinson has sold £181,420-worth of shares “for the purpose of settling personal tax liabilities”. This follows chief executive officer, Stephen Burns, chief financial officer, Laurence Keen, and their spouses offloading a little over £800,000-worth of shares at the beginning of the month. Those share sales were also said to be for tax purposes and to cover property-related expenses.
It is never supportive of the market value when multiple company directors offload shares within a short space of time, and at 191p, Hollywood Bowl’s share price is now below where they cashed out. However, somewhat reassuringly, they have all retained stakes in the company, and this is the first time Mr Burn and Mr Keen have sold any shares since Hollywood Bowl first listed back in September 2016.
Prior to the pandemic, the shares had been steadily rising since IPO, reaching as high as 316p around this time last year. While they remain depressed in the wake of the ‘Corona crunch’, momentum may return once the Covid-19 vaccines are more widely distributed, lockdown restrictions are lifted, and pent-up leisure demand is unleashed. Hollywood Bowl is the UK’s largest tenpin bowling operator, and this is an affordable leisure activity for consumers during leaner economic times.
The group’s expansion plans demonstrate its confidence in its long-term outlook – it plans to open an average of two new centres per year from its 2022 financial year – and once this crisis passes, Hollywood Bowl should return to strong cash generation and high margins. With the shares changing hands at 14 times consensus 2022 earnings, they look like an attractive pandemic recovery play. Buy.
Last IC View: Buy, 192p, 14 Dec 2020
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