ii view: William Hill owner 888 negotiates near-term hurdles

Third-quarter and year-to-date trading update

• Expects third-quarter revenues to be down 10% from last year
• Full-year adjusted profit margin now expected at between 18% and 19%, down from a previous 20%

Executive Chair Lord Mendelsohn said:

"This has been an important quarter for the business with the announcements of Per Widerström as our new CEO and Sean Wilkins as our new CFO, who I am very confident will lead the business through its next phases of growth and I look forward to Per starting as CEO in mid-October.

“We are strongly focused on investing to deliver good levels of expected revenue growth in 2024 as we progress towards our clear target of more than £2 billion of revenue in 2025 and I look forward to the coming years with confidence."

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ii round-up:

888 Holdings (LSE:888) is both a sports betting and gaming company.

Group brands include William Hill, 888 and Mr Green. 

It operates across three divisions. UK and Ireland online, UK Retail covering its 1,300 plus William Hill betting shops, and International, offering its products online in countries such as Italy, Spain, Denmark, Germany and a US partnership with Authentic Brands Group via its SI Sportsbook and casino brand.  

For a round-up of this latest trading update, please click here. 

ii view:

Started in 1997, 888 today employs around 11,000 people globally. Headquartered in Gibraltar, the UK generated its biggest slug of sales during its last financial year at almost three-fifths, followed by Italy at a tenth, Spain at 5% and the rest of the world the balance at just over a quarter. Group competitors include Paddy Power owner Flutter Entertainment (LSE:FLTR) and Ladbrokes firm Entain (LSE:ENT). 

For investors, unexpected sports results squeezing margins remain an ever-present threat. The implementation of safer gambling measures to help tackle problem gambling and the continued possibility of tighter government regulations, particularly in the UK, warrant consideration. So do previous fines from the UK Gambling Commission, while group net debt of £1.66 billion following its acquisition of William Hill in Europe compares to a stock market value of under £450 million. 

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On the upside, the purchase of William Hill operations give it a famous brand name and expands its exposure in sports betting, and the company has a diversity of brands and geographical operations. The new chief executive will likely look to inject renewed rigour back into group strategy, cost savings to reinvest back into the business, plus a push to reduce debt are being pursued.

For now, and while William Hill gives grounds for longer-term hope, investors may want for evidence of a recovery from current challenges before acting.

Positives: 

• A diversity of products and geographical locations
• Possible industry consolidation 

Negatives:

• Potential for increased regulation
• Cost-of-living crisis for consumers 

The average rating of stock market analysts:

Buy