Ladbrokes shocked the City with its third profit warning of 2013 today as the bookmaker’s ailing online business lost yet more ground on its rivals.
Shares tumbled 8%, or 14.9p, to 173.2p, as it said digital profits would be just half the £27.5 million pencilled in by analysts. The bookie blamed slower-than-expected progress in revamping its struggling online operations, as well as unfavourable football and horse racing results for the shortfall in a difficult summer.
The latest warning turns up the heat on chief executive Richard Glynn, who joined three years ago from Sporting Index with the brief to close the gap on competitors such as William Hill.
Glynn, who will earn a £12 million bonus if he can get the shares above 297p, said he would be “resolute” in facing down criticism. “There is only person in the company who is accountable, and that is me,” he said.
In March, Ladbrokes struck a deal with software and services group Playtech under which the Israeli firm supplies a full range of casino-type games under the “Vegas” brand, as well as its superior technology and marketing expertise.
About 40 of Playtech’s staff have joined Ladbrokes’ new Israeli operation but Glynn today admitted he had underestimated the difficulty of the transition from the bookmaker’s current set-up. About 200 mostly London-based digital marketing staff are under threat of redundancy, of which around 120 are expected to lose their jobs.
Glynn said the firm had “underestimated the disruption” that the integration was going to have. “The morale and people focus is not quite as intense as it otherwise would be,” he said.
Ladbrokes has not been helped by a string of football results that were good news for punters but not for bookmakers. In last week’s first round of Champions League matches, 15 of 16 favourites all won, while the number of draws in the Premier League so far — favourable for the bookies — is down 35% on last year.
Glynn is looking to complete the online overhaul early next year as well as launching a new Playtech-powered mobile app. Peel Hunt analyst Nick Batram said: “Investors must be concerned management has consistently got digital so wrong.
“Platform migration isn’t easy, but Ladbrokes’ experience appears to be particularly brutal. Sports results may have exacerbated the situation, but this shouldn’t be allowed to cloud the issue. Competitors will be scenting blood.”