Goals sales fall flat after hit from weather on home turf
FIVE-A-SIDE football pitch operator Goals Soccer Centres has seen its performance in the UK fall short of hopes in the first half because of bad weather.
The East Kilbride-based firm, which runs 46 centres in the UK and one in Los Angeles, said like-for-like sales on home turf fell 2 per cent as an improvement in trading in the second quarter was not enough to recover the shortfall seen in the first three months.
Managing director Keith Rogers said demand had been hit by “adverse weather conditions” compared with the first quarter of last year, along with “some softness” in the casual market.
He added: “Our UK performance, against some tough comparatives, has been slightly below our expectations.”
The warning saw shares in the Aimquoted company, which hit 238.5p in February – their highest closing level for a year – slide 13p or 6 per cent to 203p.
However, Rogers said the firm was “very encouraged” by the ongoing strength of trading in the US, “which supports our development programme in the Los Angeles area”.
Overall sales for the first six months came in at £17.1 million, unchanged from a year ago, with sales in LA jumping 20 per cent.
Goals said construction on a second US site is due to start in the second half of the year, while heads of terms are agreed and legals commenced on a further three sites. In the UK, where it opened centres in Doncaster and Manchester in the first half, there are also plans for an additional venue.
A typical Goals centre has between nine and 14 floodlit pitches and has a capital cost of around £2.3m, with a build time of about five months.
In a bid to reduce the number of cancelled matches when players drop out, Goals has launched a mobile app that allows users to send out “blasts” to help find replacements. More than 30,000 people have downloaded the app, and the company is working on a loyalty scheme to accelerate take-up.
N+1 Singer downgraded its rating on Goals’ shares from “buy” to “hold” in the wake of yesterday’s trading update, which analyst Sahill Shan described as a “mixed bag”, with the strong sales growth in the US overshadowed by the “disappointing” performance in the UK.
Shan added: “Given this year had been billed as the start of a recovery phase, the downgrades will clearly hurt investor sentiment. However, owing to a couple of adverse dynamics at play in the period, we feel it would be hasty to rubbish the recovery thesis and feel that the next six months will give a much better understanding.”
House broker Canaccord Genuity maintained its “buy” recommendation but lower its target price to 240p, down from 255p previously.
Analyst Nigel Parson said: “A poor start to the year in the UK versus tough comparatives was not helpful in the all-important first weeks. The second quarter has recovered but not enough to fully offset the early weakness. This makes the September peak more important than usual this year.”
Goals recently appointed a development director to help with its expansion drive in the US – a move that will increase costs by about £300,000 a year.
Parson added: “It is difficult to be precise on the timings of the new US openings because of the stifling red tape to cut through, so we have pushed our assumptions back six to 12 months. The appointment of a new US development director should help in the longer term, but contributes to the bow-wave of costs in the shorter term.”
In March, Goals posted a 10 per cent rise in annual pre-tax profits to £10.6m, on sales 3 per cent higher at £34.7m.
Following the trading update, Canaccord Genuity trimmed its profit forecast for the current year to £11.1m, down from its earlier estimate of £11.9m.
Goals is due to publish its first-half results on 9 September.