UK-listed gambling operator Ladbrokes Coral Group turned in a mixed Q3 trading update, and analysts are warning of further challenges ahead.
On Monday, Ladbrokes Coral reported overall revenue rising 3% year-on-year for the four-month period starting July 1 and ending October 29, as strength in some online brands and in European retail operations overcame declines at Ladbrokes’ online operations and UK retail shops.
On the positive side, overall digital revenue improved 12%, with sportsbook revenue rising 18% and gaming up 6%. The Coral.co.uk site showed a 13% revenue rise, while Galabingo.com improved 10%. Galacasino.com was forced to pay out a £1m progressive slots jackpot during the period, reducing the overall Gala digital revenue gains to 3%.
Ladbrokes’ Australian online sports betting operations saw stakes rise 41% and revenue improve 50%. The Italian-facing Eurobet.it site was also in fine form, with stakes up 35% and revenue up 36%.
On the downside, Ladbrokes.com revenue was 9% lower year-on-year, which the company blamed on a suspension of new features and product releases as the site was migrated onto a single digital platform following last year’s merger of Ladbrokes and Gala Coral’s operations.
Retail operations were also a mixed bag, as the mainstay UK business saw revenue fall 1% as OTC wagering revenue dipped 4% and machine gaming revenue was flat. In July, the company ended its squabble with The Racing Partnership by inking a new revenue-share racing content deal and the company said 80% of the racing volume it lost due to this disagreement has now returned.
By contrast, European retail revenue jumped 17% as betting stakes rose 10% and gross win margins improved 0.8 points thanks to more bookie-favorable results in Italy.
Ladbrokes Coral CEO Jim Mullen hailed his company’s “strong” digital performance and the “very strong” Italian and Australian divisions. Mullen found the Coral and Gala online brand growth “very pleasing” while insisting that work was underway to improve Ladbrokes.com’s customer acquisition and retention to boost profit conversion.
Investors were less impressed, pushing the stock down 2.5% by the close of Monday’s trading. Analysts warned that Ladbrokes’ UK already weak retail operations are due to take a hit from the government’s triennial review while Australian operations are facing the likely introduction of a federal point-of-consumption tax.