Hollywood Bowl Group H1 Earnings Call Highlights

Key Points

• Hollywood Bowl posted record first-half results, with revenue up 9.5% to £141.5 million and adjusted EBITDA rising to £42.2 million, while management said demand for family leisure experiences stayed resilient despite a tough consumer backdrop.
• Growth was driven by both UK and Canada: UK revenue rose 9.4% on pricing, add-on sales and new centers, while Canadian revenue increased 12.5% as new openings continued to expand the business and the pipeline for future sites grew.
• The company highlighted strong cash generation and shareholder returns, ending the half with £26 million in net cash, proposing a 4.52 pence interim dividend and planning a £5 million share buyback, even as it managed inflation with hedging and cost controls.

Hollywood Bowl Group LON: BOWL reported record first-half revenue and earnings, with management saying demand for “high quality family leisure experiences” remained resilient despite a challenging consumer and cost environment.

Chief Executive Stephen Burns said the group delivered revenue of £141.5 million for the first half of its 2026 financial year, up 9.5% from the same period a year earlier and up 2.3% on a like-for-like constant currency basis. Group adjusted EBITDA, measured on a pre-IFRS 16 basis, rose to £42.2 million, while profit after tax was £22.2 million.

Burns said the company was “very pleased” with the period, citing progress in trading performance, cost control and strategic execution. He said the group ended the half with net cash of £26 million and an undrawn £25 million revolving credit facility.

The company proposed an interim dividend of 4.52 pence per share, in line with its policy of paying 34% of the prior year’s full-year dividend at the half year. Management also said it plans to start a £5 million share buyback in the second half.

UK Growth Driven by Pricing, New Centers

Chief Financial Officer Antony Smith said UK revenue rose 9.4%, with growth split roughly three-to-one between new centers and like-for-like performance. UK like-for-like sales increased 2.6%, which Smith described as “very creditable” against a difficult market backdrop.

The UK performance reflected a 7.6% increase in spend per game, offset by a 3.4% decline in game volumes. Smith said the company continued to optimize yield management and pricing while growing add-on sales. New UK centers in Inverness, Uxbridge and Reading were the main contributors to £7.5 million of revenue growth from new sites.

Burns said the company’s UK offer remains positioned around value, noting that a family of four can bowl for around £26. He said the group is using digital demand tools and dynamic pricing to support customer flow and yield, while being more selective with promotions.

Burns also said Hollywood Bowl is increasing in-center spend through amusements, targeted upsells and the use of artificial intelligence in its proprietary booking system. He said the like-for-like game volume decline seen over the past two years, driven by post-pandemic normalization and increased competition, “has arrested during the half.”

Canada Expansion Accelerates

In Canada, revenue grew 12.5% on a constant currency basis, almost entirely driven by new centers. Smith said openings in Kanata and Creekside in fiscal 2025, along with Edmonton in the current year, contributed £3.2 million of additional revenue. Canadian like-for-like sales were up 0.5%, despite short-term closures in February during major snowstorms on the East Coast of North America.

Burns said the Splitsville business remains “an exciting growth opportunity” and noted that Canada accounted for 16% of group revenue in the half, compared with 3% in 2022. The group opened a new center in Edmonton, Alberta, during the period, and plans to open another in Barrie, Ontario, in the second half.

The company is also completing a £3.4 million refurbishment of Richmond Riverport, including the removal of eight bowling lanes to create a larger amusement offer and the installation of Pins on Strings technology.

Burns said the Canadian pipeline has expanded, with five sites now expected to open in fiscal 2027, up from the two previously communicated. He said the brand is gaining traction with large institutional landlords after demonstrating the quality of its product.

Cost Controls Support Margins

Management emphasized the company’s ability to manage inflationary pressures. Burns said the group’s margin profile provides “enviable insulation” against inflationary, government and macroeconomic pressures. He said 70% of group revenue is not subject to cost-of-goods inflation.

Energy was highlighted as a key area of visibility. Burns said 76% of the group’s total energy needs are hedged through the end of fiscal 2029. He also said the company expects 16% of its energy requirement to come from onsite solar.

Smith said labor costs increased 18.5%, reflecting both additional centers and inflationary pressures from the National Living Wage and National Insurance increases. However, he said labor remained about 20% of revenue, which made the inflation manageable within the overall profit model.

Adjusted profit before tax rose 8.1% to £32.1 million from £29.7 million. Smith said the increase reflected strong UK performance, with like-for-like centers adding £1.5 million and new centers contributing £3.4 million. Canadian like-for-like profit declined by about C$0.6 million as modest sales growth did not fully offset input-cost inflation, while new Canadian centers contributed about C$1.3 million.

Impairment Weighs on Reported Profit

Reported profit before tax was £27.2 million, down £1.1 million, or 3.9%, from the prior year. Smith attributed the difference below adjusted profit to lease accounting effects and adjusting items.

The company recorded £3.3 million of adjusting items, including a £0.5 million accrual for contingent consideration related to the Canadian acquisition and a £2.8 million impairment of one UK bowling center. Smith said the center still generates cash but produces single-digit returns, meaning it could not support its carrying value under an impairment test using a 13% pre-tax weighted average cost of capital.

Smith said the impairment was a non-cash item related to historic asset values and added that management remains confident in the quality of recent openings. Across the last 12 UK bowling center openings, he said average return on investment was 26%.

Outlook Remains in Line With Expectations

Smith said the company does not provide a formal forecast but expects to deliver in line with expectations. He said the consumer market remains challenging, but Hollywood Bowl expects continued like-for-like growth through yield and capacity management, add-on sales and modest inflation through dynamic pricing.

The group generated £30 million of free cash inflow before investments and shareholder distributions, representing 71% conversion from adjusted EBITDA. Smith said capital spending was relatively low in the first half at £3.9 million for Edmonton, early work on Cardiff and smaller revenue-enhancing investments. Second-half investment capital is expected to be two to three times the first-half level as the group opens two UK centers, one Canadian center and begins work on its fiscal 2027 pipeline.

Burns said Hollywood Bowl remains on track toward its target of 95 UK sites by 2035. The estate currently includes 93 centers, with 77 in the UK and 16 in Canada.

About Hollywood Bowl Group LON: BOWL

Hollywood Bowl Group plc is a leading international leisure operator of ten-pin bowling and mini-golf centres, bringing families and friends together for affordable fun and safe, healthy competition. Our unique purpose-led culture and proven investment-led strategy are enabling us to capitalise on the significant growth opportunities in the markets we operate in, and achieve strong returns on capital invested. We are market leader in the UK and Canada, and one of the largest operators of ten-pin bowling centres in the world.

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