During the recession betting shops became the saviours of many high streets, taking up empty units and lowering vacancy rates. However, with the end of the recession came calls to slow the rapid expansion of bookmakers, with many local authorities voicing concerns that they were detracting from the diversity of town centres and pushing out small retailers.
But by far the firmest brake on the spread of betting shops has been the rise in taxes on fixed odd gaming machines, brought in after reports indicated consumers were spending millions of pounds on these terminals each year. This has caused many chains to announce a flurry of store closures, with Coral following in the footsteps of rivals William Hill and Ladbrokes in declaring upcoming closures “inevitable”.
Although parent company Gala Coral’s second quarter results show an increase in gross profits of 3 per cent to £215 million, the group believes that store closures must occur in order to keep operating profits in line. This, it claims, is because the government “has continued to react to scaremongering and misleading information about the impact of Fixed Odds Betting Terminals (FOBTs) on problem gambling.”
In a statement, the group continued; “As a result of the announced changes, and consistent with statements made by our competitors, the group regards shop closures, and therefore job losses, as inevitable.”
As of yet, no closures have been confirmed, but it is believed that Gala Coral will be examining its store portfolio in order to weed out the outlets making the least amount of profit on a non-FOBT basis. It is hoped this will have a positive impact upon the group’s retail division EBITDA, which fell by 19 per cent, or £8.9 million, year on year to £38.1 million.
Like many bookmakers in the current climate, Coral will channel investment into improving its website rather than paying out for new store openings. In its online division, EBITDA grew by 138 per cent after upgrades were made to the website, playing a vital role in Gala Coral’s overall growth.
Group chief executive Carl Leaver indicated that further investment into its multi-channel operations may be on the cards due to the enthusiastic response by consumers.
He said; “Online growth momentum is very encouraging with coral.co.uk now coming through strongly.
“The combination of a single online wallet, improved content and simplified customer journeys is driving both actives and spend per head significantly ahead of expectations.
“During the quarter we launched Coral Connect, which enables customers to access the single online wallet in shops both over the counter and on machines – the initial take up of the connect card has been positive with sign-ups already ahead of our full year target.”
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