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Ladbrokes issues profit warning Ladbrokes issues profit warning
(6 months later)
Ladbrokes, Britain's second largest bookmaker, has issued a shock profit warning. The company, which still operates more than 2,000 betting shops in Britain, warned that it expected annual operating profit to fall this year after a poor first-quarter performance in horse racing and online gaming. Its shares slipped by 8%.Ladbrokes, Britain's second largest bookmaker, has issued a shock profit warning. The company, which still operates more than 2,000 betting shops in Britain, warned that it expected annual operating profit to fall this year after a poor first-quarter performance in horse racing and online gaming. Its shares slipped by 8%.
Ladbrokes has fallen behind rival William Hill, which has taken a large lead in the growing online gambling sector, but recent improvements to its website have increased hopes that it may soon close the gap.Ladbrokes has fallen behind rival William Hill, which has taken a large lead in the growing online gambling sector, but recent improvements to its website have increased hopes that it may soon close the gap.
Chief executive Richard Glynn said conditions on the British high street were very difficult. "The trading environment and economic conditions since the start of the year have remained challenging," he said in a statement.Chief executive Richard Glynn said conditions on the British high street were very difficult. "The trading environment and economic conditions since the start of the year have remained challenging," he said in a statement.
The company had expected first-quarter profits to be lower than last year because of increased costs and the imposition of a new 20% machine games duty in its high street shops. Meanwhile, the company also blamed the racing results for its poor figures, as it paid out on a number of favourites that won during last month's Cheltenham Festival. The poor spring weather also caused numerous race cancellations, further denting takings.The company had expected first-quarter profits to be lower than last year because of increased costs and the imposition of a new 20% machine games duty in its high street shops. Meanwhile, the company also blamed the racing results for its poor figures, as it paid out on a number of favourites that won during last month's Cheltenham Festival. The poor spring weather also caused numerous race cancellations, further denting takings.
Bookmakers tend to suffer when a string of favourites win, as more punters will have bet on them and therefore need to be paid their winnings. Conversely, when favourites fall short – as Tiger Woods did in the weekend's US Masters golf – the bookies should make a large profit. Over the long run, the mathematics of bookmaking is designed to ensure that the profits from failing favourites more than cancel out the losses when they win. Bookmakers tend to suffer when a string of favourites win, as more punters will have bet on them and therefore need to be paid their winnings. Conversely, when favourites fall short – as Tiger Woods did in the weekend's US Masters golf – the bookies should make a large profit. Over the long run, the mathematics of bookmaking is designed to ensure that the profits from failing favourites more than cancel out the losses when they win.
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