Shares in Ladbrokes rose 7 per cent yesterday even though pre-tax profit fell by more than half in the third quarter as the betting group stepped up its marketing spend.
The group, which in July announced a merger with rival Gala Coral, said it was spending more than 30 per cent of its net gaming revenue on marketing to boost its customer base.
The result is a 17.5 per cent year-on-year increase in the amount wagered on football since the season began, with staff in Ladbrokes’ betting shops encouraging customers to use terminals to bet during matches and sign up for online accounts.
Jim Mullen, chief executive, said 20,000 people had been signed up for an internet account while in a Ladbrokes store. "We are on day 68 [of the new strategy] and I understand about the profit impact but I did say back in July that would be the case." He said the group now needed to focus on "yield per customer".
Pre-tax profit was £14.3 million (€19.8 million) in the third quarter, a 56.7 per cent fall from last year. Revenues were down 0.7 per cent in the quarter compared with last year, when the bookmaker benefited from the football
Stripping out the benefit of the tournament, Ladbrokes said revenues would have been up 2 per cent. The company’s digital arm grew by 6.4 per cent, year on year.
The football season has seen several results go Ladbrokes’ way, and the company said it had seen a 17.5 per cent increase in bets staked so far this season compared with last year, which helped offset some unfavourable horseracing results.
Mr Mullen said the merger with Gala Coral was “on track” after Ladbrokes completed its £1.35 billion financing call earlier this month. This week, Ladbrokes applied to issue 400,000 new shares.
– (Copyright The Financial Times Limited 2015)