Leisure group Ten Entertainment has upped its full-year outlook after the trend for staycations amid the pandemic drove its best summer season.
The firm, which runs 10-pin bowling lanes and soft play centres, said sales surged 22.5% in the first six weeks since reopening on May 17 and then rocketed by 42% in the 11 weeks since June 27 over the summer holiday season.
Shares in the firm rose 5% as it said the full-year outlook was now expected to beat expectations thanks to the rebound, which it said saw “the most successful summer trading period in the group’s history”.
This comes despite a rocky first half, with the firm revealing that lockdown site closures saw underlying pre-tax losses widen to £10.7 million for the six months to June 27, against losses of £6.2 million a year earlier.
It said the business was closed for the first 20 weeks of the half-year.
Chief executive Graham Blackwell said: “Our hard work in the first five months of the year in preparing for the best possible opening has been rewarded by an exceptional level of sales growth on reopening.
“The short-term boost from UK staycations and the pent-up demand has not yet subsided, but we do expect it to over time.
“Nonetheless, we expect that the solid underlying levels of demand will continue for the business and that we can return sustainably to our previous track record of growth.”
The group, which also runs Houdini Escape Rooms as part of a joint venture, said it was seeing some pressure on profit margins from cost rises due to labour shortages and wider inflation.
But Mr Blackwell told the PA news agency the group would keep prices low for customers and said it had secured its energy prices until the start of 2024, which should protect it from the current soaring gas costs.
He said: “We consider these inflationary pressures to be manageable.
“Our pricing strategy will remain to offer good value to our customers and to use the resultant increased footfall and frequency as the engine for profit growth.”
He added: “If the price of gas quadrupled, then we’d have to look at doing something (on price).”
But he said the group’s move to secure suppliers and contracts during lockdown was helping shield the group and allow it to hold off from passing on costs to customers.
He cautioned the CO2 shortage posed more of an immediate threat to the sector, given its high sales of fizzy drinks across its 46 sites, and welcomed the Government’s move to step in and secure short-term supply with US producer CF Fertilisers.
The group also confirmed plans to expand its 46-strong chain with four new centres in 2021-22, as well as refurbishing four key sites, and is expanding its Houdini joint venture to 30 escape rooms across 12 locations by the year end.
Douglas Jack, an analyst at Peel Hunt, said: “Ten Entertainment is in a sweet spot of the sector, benefiting from growth in experiential leisure, but with little exposure to labour and buying costs.”