2024-02-07 22:33:42 ET
Summary
- The company’s revenues rose by 11.8% year on year in Q2 FY24 but same-store revenue growth was flat.
- In addition, interest expenses soared by 68.9% to $46.2 million as Bowlero is prioritizing share buybacks and dividends over debt reduction.
- In my view, BOWL's growth model doesn’t work well in a high interest rate environment, and the strength of the balance sheet is likely to continue to deteriorate.
Introduction
In April 2022, I was the first to cover bowling center operator Bowlero (BOWL) on SA as the latter listed on the NYSE through a merger with a special purpose acquisition company ((SPAC)) named Isos Acquisition Corporation. Back then, I said that Bowlero had a strong moat and should rapidly reduce its debt load thanks to a free cash conversion rate of over 60%....
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For further details see:
Bowlero: Time To Take Profits (Rating Downgrade)