During the recession, bookmakers were one of the few businesses taking-up space on the high street. However, as the economic recovery continues to gather pace, local authorities have begun to wage war on gambling shops, meaning increasing numbers of bookmakers have had to turn their attentions to their online offering in order to continue their expansion.
This week, bookmaker Ladbrokes has reported a worrying plunge in first half profits despite having what it called a “good World Cup” performance. Pre-tax profits fell by 49.7 per cent to £27.7 million in the six months ending the 30th of June, largely due to the chain’s focus on operational improvements throughout the period.
Part of the problem faced by Ladbrokes was the transition to a new system within its gaming products, made essential by a new tie-up with software developer Playtech. The chain admitted that this switchover had caused more issues than initially anticipated, but expects all disruptions to be resolved within the second half.
In addition, Ladbrokes suffered heavily due to the introduction of The Association of British Bookmaker (ABB)’s voluntary code of conduct, which encourages players of gaming machines in to set time and spending limits as a means of encouraging responsible gambling.
Chief executive of Ladbrokes, Richard Glynn, does not believe that this poor result will have a detrimental impact on the business.
He says; “We have made substantial progress – we now have the products, the platforms, the people and the brand in place to deliver.
“The board remains confident of the outlook for the business and in delivering a result in line with its expectations for the current year.”
During the first half, Ladbrokes closed 46 stores it claimed to be “underperforming”, allowing it to draw close to its 50 closures for the financial year. In fact, it appears that it may surpass the store closures targeted this year although executives have not yet released a revised number.
Analyst at Peel Hunt, Nick Batram, confirms that the steep plunge in profits was largely expected by industry experts, but does not believe this will negatively affect performance in the second half.
He says; “The results are unquestionably poor but they are in line with forecasts.
“It’s also a positive narrative from Ladbrokes in that it has focused on all the things it is implementing to put it right.”
