Wed, May 22, 8:20am by Kevin Pitstock
Ladbrokes announced the lay-off of 100 employees from the online side of their business operations on May 21st. The downsizing comes after an announcement of declining profits last month which caused Ladbrokes stocks to plummet.
The key lay-offs come from the marketing, support, and product teams of Ladbrokes online product. An official with the company spoke of the positions as “redundancies” and suggested key tasks would be shifted to the Tel Aviv subsidiary.
Last month, Ladbrokes stock prices lost 16.6 points down to 190.3, after the second largest bookmaker announced profits would be “at the bottom end of forecasts”. This news came in an unscheduled update on annual profits. The decline in profits was at £188m, down from £216m last year. Operating profits in the 1st quarter declined from £37.4 million down to £13 million.
A full £6 million of the lower revenue can be traced to paying out on favourites at the Cheltenham Festival. The Cheltenham Festival is an annual race week in the United Kingdom which attracts top horses from the UK and Ireland. In 2013, 27 different races took place over a four day span. Ladbrokes, Sportingbet, and other top online bookmakers are sponsors of particular races.
With several hundred million pounds wagered over a four-day period at the festival, bookmakers can face problems when most of the favourites win, because the gambling public tends to bet more on favourites.
Cheltenham was only one problem area, though. Ladbrokes Chief Executive Richard Glynn was quoted in April 2013 saying, “The trading environment and economic conditions since the start of the year have remained challenging.” The world economy continues to affect all international commerce and financial transactions, including the online gambling industry.
Ladbrokes has retrenched financially several times in its long history. Ladbrokes was founded in 1886 as an English bookmaker. The company’s fortunes waxed and waned over the decades, but it remained a fixture of UK horse racing and sports betting. After World War II, Ladbrokes’ financial troubles were connected to the UK’s own precarious economy. Its recovery also mirrored the economic recovery of Britain from the 1960’s onward.
The company first appeared on the London Stock Exchange in 1967. For most of the past few decades, Ladbrokes plc. traded on the LSX as part of FTSE 100 Index. Since June 2006, the company’s stock has been relegated to the FTSE 250 Index, still an important position. From 1999 to 2006, Ladbrokes was known as the Hilton Group plc. During those years, it owned the Hilton hotel brand outside of the United States.
After the UK Gambling Act 2005, Ladbrokes faced complaints in 2006 and 2009 about television advertisement, not unlike the recent complaints Australian sports viewers have had with Aussie TV promotions of online bookies.
Ladbrokes online operations has lagged behind its chief rival, William Hill, for some time. In his April 2013 statement to stockholders, Mr Glynn said there was cause for optimism. Ladbrokes has redesigned its online operations to better compete in the world marketplace. This latest change streamlines the Internet support staff and lowers payroll, so the business should see an uptick in profits immediately, even if revenues remain flat.
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