Ladbrokes Plc, the U.K. operator of about 2,100 betting shops, fell to the lowest price in almost a year after saying full-year earnings from online gambling may be less than half the amount predicted by analysts.
“Our digital earnings have been disappointing, reflecting a lack of competitiveness in sportsbook, lower margins than planned and a greater disruptive impact than expected from the transition necessary,” Chief Executive Officer Richard Glynn said today in a statement.
Operating profit before exceptional items from the online unit will be 10 million pounds ($16 million) to 14 million pounds this year, while the average analyst estimate had predicted 27.5 million pounds by that measure, according to the Harrow, England-based company.
The shares fell 7.6 percent to 173.80 pence, the biggest decline since April and the lowest price since October. It was the largest drop on the FTSE All-Share Index, and trading was more than five times the three-month daily average.
Ladbrokes has “apparent disarray” in its digital operations, said Ivor Jones, an analyst at Numis Securities who had predicted online earnings of 28 million pounds. Jones cut his full-year estimate of earnings before interest and taxes for the whole company by 16 percent to 144 million pounds.
Ladbrokes shares have fallen 12 percent this year, while William Hill Plc, another operator of both betting shops and online gaming, has gained 26 percent.
“Yet another disappointment from Ladbrokes digital operation,” Greg Johnson, an analyst at Shore Capital who has a hold rating on the stock, said in a note. “We continue to be frustrated by the lack of progress online and struggle to get a value of more than 140 pence per share for retail alone.”
After a “difficult” July, footfall at Ladbrokes retail outlets has recovered, with “significant improvement” in amounts wagered, Ladbrokes said today.
At the same time, margins across the business are lower than the company expected. Ladbrokes is confident its current management team has the right strategy to adapt to online betting and gaming, Chairman Peter Erskine said.
Of 23 analysts who share estimates on Ladbrokes with Bloomberg, 7 advise buying the stock, 12 recommend holding and 4 say sell.