Gala Coral set for ‘inevitable’ shop closures despite Q2 growth
Betting operator Gala Coral has said that despite having recorded year-on-year growth during the 12 weeks to April 12, 2014, recently announced changes in UK gambling regulations mean that the closure of some of its shops is ‘inevitable’.
The company was able to post total group group earnings before interest, tax, depreciation and amortisation of £69.2 million (€85.1 million/$116.5 million) during the second quarter, which was slightly up on the £69.1 million achieved in the corresponding period last year.
Gross profit at the firm also increased to £215 million, up 3% on the £208.8 million recorded in the same period last year, while continuing EBITDA remained level at £62.7 million.
Continuing turnover also grew 8% from £279.9 million last year to £302.2 million in the most recent quarter.
Gala Coral cited its online business as the main reason behind its success in the quarter.
The operator’s online business generated continuing profit of £11.4 million in the quarter, 44% ahead of last year while continuing EBITDA grew 138% to £21.7 million.
“The group delivered strong underlying growth for the second quarter in a row, with underlying year to date EBITDA (pre-exceptionals) ahead in all divisions and 16% overall,” Gala Coral group chief executive officer Carl Leaver said.
“Online growth momentum is very encouraging with Coral.co.uk now coming through strongly.
“The combination of a single online wallet, improved content and simplified customer journeys is driving both actives and spend per head significantly ahead of expectations.”
Despite the successes in online, Coral’s retail business did not fare as well in Q2 and was only able to post continuing gross profit of £133.2 million, which is down on the £135.7 million posted in Q2 of 2013.
With the retail business having taken a financial hit during the quarter, Gala Coral said more bad news is likely to follow due to the introduction of new gambling regulations by the UK government.
Earlier this month, UK Minister for Sport, Tourism and Equalities Helen Grant outlined the government’s gambling regulation plans, which include a tougher stance on fixed-odds betting terminals.
Gala Coral said that despite the introduction of a new code of conduct by the Association as British Bookmakers, the government has continued to react to ‘scaremongering and misleading’ information about the impact of FOBTs on problem gambling and the new measures introduced to combat these issues will negatively impact its retail business.
Gala Coral said in a statement: “As a result of the announced changes, and consistent with statements made by our competitors, the Group regards shop closures, and therefore jobs losses, as inevitable.
“Tax revenues will also suffer and payments to racing will reduce, which will threaten the fragile economic position of the UK’s second most popular sport.”
Related article: UK Minister outlines gambling regulation plans