Marketwatch: Investors looking for a winner from Ladbrokes

INVESTORS in bookmaker Ladbrokes will be hoping for a progress report on its attempt to acquire online gambling firm Sportingbet when it gives a trading update on Thursday.

The bookie first made an approach to Sportingbet in June, but under takeover rules has until 17 October to make a firm offer or else walk away.

Having failed to conclude a deal with another gambling group, 888, earlier in the year, management will be under pressure to seal something this time round.

Ladbrokes’ interest in Sportingbet is part of a strategy to move away from the traditional over-the-counter shop operation and to boost its presence in faster-growing areas such as “in-play”, or live betting during a sports match, an area where Sportingbet specialises.

Chief executive Richard Glynn launched a revamp of the brand in February this year to reinvigorate the Ladbrokes name, which included investment in technology, especially mobile, as well as adjusting formats for games machines to suit local areas.

Machines revenue was strong in the first half of the year, with the gross win per terminal rising by 15 per cent per week to £821.

Stripping out the impact of last year’s football World Cup, first-half net revenue rose by 2.8 per cent and operating profit by 16.9 per cent, but shares in the group have tumbled by 25 per cent due to fears about the impact of the consumer squeeze on betting.

However, betting has shown itself to be resilient. For the full year, Bank of America Merrill Lynch’s estimates are for Ladbrokes to make pre-tax profits of £147 million.

Mail order and online shopping group N Brown, which publishes interim figures on Tuesday, had a mixed message in its last update in July.

Sales were strong, with growth of 5.1 per cent in the 18 weeks to 2 July, but getting people to buy became more expensive, with an increase in promotional activity cutting gross margins by 0.2 per cent.

The Manchester-based group, which owns Simply Be, High & Mighty, Figleaves, Marisota and Jacamo, has also taken a step into multi-channel retailing to boost business.

The firm opened its first Simply Be store, in Liverpool, last month, with another just opened in Bury. The store in Liverpool has order points throughout that give access to the Simply Be website, although not other N Brown brands. Further trial stores are planned for next year.

John Stevenson, analyst at broker Peel Hunt, said the question was whether N Brown can create a sizeable multi-channel offer that accelerates brand sales and offers the opportunity to launch other branded stores or shop-in-shops such as Jacamo.

Last year the group also extended the international expansion of Simply Be into the US following a launch in Germany in 2009. A progress update on the overseas growth is also expected on Tuesday.

House broker Royal Bank of Scotland forecasts interim profits of £47.8m. Consensus forecasts for the full year to the end of February are for profits of £102.7m, up from £98.2m a year before, with sales up 5 per cent to £757m.