BOWL

Hollywood Bowl is the UK’s largest ten-pin bowling operator, with a scaled, branded estate (Hollywood Bowl plus Puttstars mini-golf) and an increasingly meaningful second leg in Canada via Splitsville. The model is structurally attractive for a consumer cyclical name: high-throughput venues, strong ancillary spend (food, drink, amusements), and a repeatable “playbook” of refurbishments and tech-enabled upsell (for example at-lane ordering) that can lift spend per visit even when volumes are softer. FY2025 showed that dynamic clearly: like-for-like game volumes fell 7.5% in the UK, but spend per game rose 9.2%, allowing UK like-for-like revenue to hold up and supporting group growth. The Canadian market remains fragmented and under-branded, which is a genuine whitespace opportunity, but it also brings execution risk and (at least initially) a different profitability mix than the mature UK estate.

Financially, FY2025 was solid on revenue and statutory profit, but the underlying earnings picture is more mixed once you separate growth from cost inflation and expansion drag. Group revenue rose 8.8% to £250.7m and profit after tax increased 15.7% to £34.6m, while group adjusted EBITDA post-IFRS 16 increased 4.2% to £91.2m; however, adjusted EBITDA pre-IFRS 16 was essentially flat at £68.4m (vs £67.7m), implying that incremental revenue is currently coming with heavier operating costs and/or lower incremental margins. Gross profit on cost of goods sold remained very high at 83.3% (UK 84.4%), consistent with strong venue-level economics, but administrative expenses rose meaningfully (FY2025 results presentation shows £113.5m vs £98.6m). On balance sheet and cash, liquidity is adequate but not abundant: cash at 30 September 2025 was £15.2m, and the business is capital intensive (capex and refurbishments) while also returning cash to shareholders (dividends plus buybacks). Management guides FY2026 capex of roughly £25m–£30m, with two new centres planned in the UK and two in Canada, and notes FY2026 cost pressure from business rates and wage increases, which is important for near-term margin expectations.

Over the next 12 months (from March 20, 2026), the core thesis is that BOWL can compound earnings through a combination of new centre openings, high-ROI refurbishments, and continued monetisation of spend-per-game, but the share’s upside will likely depend on proving that Canada can scale without diluting group returns and that UK cost inflation can be offset by pricing and mix. The most actionable catalysts are (1) evidence in FY2026 trading updates that like-for-like revenue can re-accelerate without relying on price alone (i.e., stabilising volumes), (2) early performance of the planned FY2026 new builds (two UK, two Canada) and refurbishments, and (3) clarity on the sustainability of shareholder returns given the capex envelope and relatively modest cash balance. Key risks are (a) margin compression from labour and business rates in FY2026, (b) execution risk in Canada (integration, site selection, and returns on invested capital), and (c) consumer pullback in discretionary spend that could pressure volumes further, making price/mix harder to sustain.

Recommendation: HOLD. The business has credible quality signals (scaled brand, strong gross margins, and a proven ability to lift spend per game) and a tangible long-run runway in a fragmented Canadian market, but the near-term setup looks more balanced because underlying pre-IFRS 16 EBITDA was flat in FY2025 and FY2026 faces identifiable cost headwinds alongside elevated investment needs. I would look to get more constructive on a clear inflection in underlying EBITDA/cash generation (not just revenue growth) or a valuation reset that better compensates for the execution and margin risks.