Ladbrokes disappointed by retail performance

High-spending telephone punters came to the rescue of Ladbrokes today after results from its betting shop operation failed to meet targets.

Ladbrokes said profits for the four months to October 31 increased by 84%, but this reversed to a 12% decline without business from telephone “high-rollers” and before the cost of a recent television advertising campaign.

The company said the below par performance from its retail business partly reflected poor summer weather after lower amounts were staked on horses in July and August because of a high number of race cancellations.

Margins on football bets have also taken a hit because of unfavourable results, it added.

Ladbrokes’ first attempt at television advertising – costing £4.7m (€6.5m) - features former footballers Ian Wright, Ally McCoist, Lee Dixon and Chris Kamara acting as construction workers on a break in a café.

The campaign may have helped trading in November as Ladbrokes reported double-digit growth in the amount of money left by punters at the UK retail business.

The figure was 4% higher in the four months to the end of October, including a 25% improvement in revenues from gaming machines. The Gambling Act, which came into force on September 1, has enabled Ladbrokes to replace its fixed odds betting terminals with those offering roulette and jackpot games and a maximum payout of £500 (€697).

In contrast, over-the-counter (OTC) betting revenues were down 5% on a year earlier. Ladbrokes said it had seen improved trends in September and October following the commencement of winter evening opening.

Ladbrokes shares fell 7% today as investors worried about prospects for the betting industry. William Hill shares were also 4% lower.

Matthew Gerard, an analyst at Investec Securities, said: “We remain sceptical the Gambling Act will produce the material upgrades some were expecting and think bookmakers are still exposed to consumer weakness.”

In August, the group saw half-year operating profits increase 29% to £195m (€272), aided by a three-fold rise at its telephone betting arm after revenues from high-rollers surged to £95.3m (€133) from £13.3m (€18.5m) .

Operating profits at the UK retail arm fell 11.6% to £100.9m (€140.7m) , reflecting tougher comparisons against the football World Cup in 2006.