William Hill warns new lockdowns will hit profit
Bookmaker William Hill (WMH) has warned that the UK’s new coronavirus restrictions could hit profits as it posted a nine per cent drop in third-quarter revenue.
The bookie said it had an “encouraging” third quarter, with a “rapid recovery in UK retail” as footfall grew.
But it cautioned that new restrictions would set it back. “We estimate that, on average, the closure of 100 shops for four weeks would reduce EBITDA [an earnings measure] by circa £2m,” it said in a trading statement.
William Hill said that excluded “the benefit from any job support schemes for which the group may be eligible”.
The UK company, which is set to be bought by US casino group Caesars Entertainment, said its overall revenue in the 13-week period to the end of September was down nine per cent year on year.
That was an improvement on the 32 per cent drop in revenues William Hill saw in the first half. It meant that so far this year revenues were down 25 per cent compared to a year earlier.
William Hill says 10 per cent of shops in Tier 3 areas
The company said: “The live sporting calendar has resumed, delivering a strong complement of fixtures across football, horse racing, tennis and American sports.”
Yet it said that “results have been more unpredictable than normal”, partly because games have been played behind closed doors.
It said this had led to “volatile gross win margins, and we would expect this situation to continue”.
The bookmaker estimated that around 10 per cent of its UK shops were under the toughest restrictions.
“As governments vary their response to the Covid-19 pandemic, we will continue to mitigate the impact on our business through careful cost control and cash management,” William Hill said.
Caesars is set to buy the bookie in a £2.9bn deal. It intends to use William Hill’s brand and expertise to expand in the fast growing US sports market.
But it plans to sell the non-US businesses. That means it would ditch the more than 1,400 William Hill shops in the UK.