LEISURE: PIN HOPES ON HOLLYWOOD BOWL

MIDAS recommended Hollywood Bowl in December 2017, when the shares were £1.89. They had risen to £3.12 by the beginning of this year. Last week, they closed at £1.53, having fallen to below 70p earlier this month. Even though the shares have come off that terrible low, the current price takes little account of the strength of the business or its prospects.

Hollywood Bowl has increased sales, profits and dividends over the past three years and a recent trading update showed strong growth from last September to February, before Covid-19 erupted. Importantly, too, the firm’s chief executive Stephen Burns seems genuinely to care about his 2,100 staff, which should bode well for the future.

Most employees are benefiting from the Government’s 80 per cent wage guarantee but Burns is topping that up through March and April, while some staff will receive full pay until May.

All sites are now closed but the group had already taken steps to mitigate risk, making fewer lanes available at any one time, turning off amusement machines and performing regular deep cleans.

In the week before sites were closed, everyone within the group took turns at cleaning, including Burns and his fellow executives. They have not just mucked in with staff, they have also showed financial support for the business, buying more than 30,000 shares with their own cash since the beginning of this month.

MIDAS VERDICT: Hollywood Bowl shares have been savaged over the past few months but they should recover. Bowling is a low-cost form of entertainment and Hollywood Bowl is the biggest operator in the UK, with a strong balance sheet and experienced managers. Once people are allowed to socialise again, the lanes are an obvious place to go. Hang on to these shares.