Goals issues profits warning as costs impact on growth
There has been a slowdown in the US business
Shares in five-a-side football company Goals Soccer Centres plunged by 17% in early trade after it issued a profits warning following rising costs and slower growth in the US.
The East Kilbride based firm said revenue has grown in the second half but margins have been reduced.
In a trading update the company said the outturn for 2018 is “disappointing” and has been impacted by both the lower margin in ancillary activities and the slower-than-anticipated growth rates in the US.
It expects investments in modernisation of arenas to deliver increased sales, and with stronger systems it anticipates a return to more normalised margins in ancillary income.
“However, we have reduced our profit guidance for Goals UK by £0.6m in light of the current economic and political uncertainty,” it said.
It has revised its estimate of trading from two new US sites during their initial two years. This has resulted in Goals’ potential share of US profits being £0.7m lower than anticipated in 2019 and 2020.
Goals has 50 sites, including four in California, and will publish final year figures on 12 March. It expects adjusted profit for 2018 of between £4.3m to £4.5m.
A number of projects in development. In the US and it will be launching a new academy product with Manchester City FC. In the UK it is exploring a series of initiatives, around coaching and sponsorship designed to drive improved performance.
Andy Anson, chief executive, said: “The investment strategy that is being executed is improving the underlying performance of the clubs, which is demonstrated in our H2 sales results.
“Frustratingly, a number of cost overruns have impacted 2018 profits. It is disappointing that well-conceived initiatives to drive revenue have been delivered at the expense of margin.
“However, we have already taken action to tighten cost control, and processes and procedures are now in place to augment and support margin management. The benefits of these changes will be felt in the current year, as will the effect of the new management team.
“We will continue to turn Goals around to deliver the performance that the management know the Company can achieve.”