Stock of Bowlero Falls 10% Premarket After Earnings Fall Short of Estimates and Company Provides Soft Guidance

On Monday, Bowlero Corp. saw a sharp decline of 18% in its stock value following the release of disappointing earnings for its fiscal third quarter and a projection that full-year figures would align with the lower end of its guidance.

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This marked the largest single-day drop in the company's stock since its data began tracking in April 2021, according to Dow Jones Market Data. Bowlero became publicly traded in 2021 through a merger with a special-purpose acquisition corporation.

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Based in Richmond, Virginia, the company reported net income of $23.8 million, or 13 cents per share, for the quarter ending March 31, compared to a loss of $32.1 million, or 22 cents per share, during the same period the previous year. Despite revenue increasing to $337.7 million from $315.7 million, the earnings fell short of analyst expectations. The FactSet consensus projected earnings per share of 23 cents and revenue of $341.0 million, while same-store revenue declined by 2.1%.

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Bowlero's Chief Executive and Founder, Thomas Shannon, attributed the slow start to the quarter to adverse weather conditions such as blizzards and flooding across the United States. However, he noted a positive turnaround in performance after the initial three weeks, with stable footing achieved and increased investments to drive traffic. Notably, the company achieved a positive same-store-comp and double-digit total growth after this period.

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During the quarter, Bowlero opened a Lucky Strike location in Miami and anticipates four additional new builds within the next nine months, including two in Denver and two in California. Additionally, the company completed the acquisition of Raging Waves, the largest outdoor water park in Illinois, further expanding its presence in the water-park sector.

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In efforts to enhance its food and beverage (F&B) business, Bowlero is incorporating lessons learned from its acquisition of Lucky Strike. This involves revamping menus, intensifying F&B training, and refining hiring processes to drive organic growth. Shannon highlighted the acquisition of Mavrix and Octane in Scottsdale, Arizona, emphasizing the success of its indoor go-kart track, which is expected to generate $8 million of EBITDA in its first year.

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Looking ahead, Bowlero revised its fiscal 2024 revenue expectations to align with the lower end of its guidance, originally forecasting growth between 10% and 15%. The company concluded the quarter with $212 million of cash and $432 million of total liquidity. Despite the year-to-date stock decline of 11.8%, Bowlero remains optimistic about its position in the evolving entertainment landscape.

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