Ladbrokes hit by worst Cheltenham Festival in 'living memory'
Ladbrokes said it suffered the worst Cheltenham Festival in "living memory" and warned it would also take a £3 million hit if Leicester City win the Premier League.
The group - which is planning a £2.3 billion merger with rival Coral - became the latest to reveal the impact of a string of unfavourable results for bookies as it blamed the Cheltenham races for taking the shine off its first quarter performance.
Its update also revealed a £3 million liability on the Premier League if Leicester win, despite a significant number of punters cashing out their bets already.
The group said rivals "abandoned bookmaking principles" at Cheltenham, offering bets at levels that did not make business sense.
William Hill warned over profits last month after describing the Cheltenham results as its "worst" in recent history.
Jim Mullen, chief executive of Ladbrokes, said: "At Cheltenham we were reminded of the intense competition with offers and pricing at levels which, in our view, abandoned bookmaking principles.
"We competed hard but refused to pursue unsustainable strategies and our stance remains that we will compete where we know we can get the right returns from the right customers."
He said it was an "encouraging" start to the year in spite of Cheltenham and said the group was on track with full-year expectations.
Shares rose 4% as first quarter trading came in better-than-expected, with net revenues jumping 10.6% year-on-year, while UK retail net revenue rose 4.1% and digital revenue surged by 36.5%.
Mr Mullen also said the 33/1 Grand National winner, Rule The World, delivered a "welcome contrast" to Cheltenham.
The update comes after Ladbrokes posted its first full-year loss in a decade in February after it was hit by investment costs and around £50 million in new online and gaming machine taxes.
It slumped to a £43.2 million pre-tax loss in 2015 against profits of £37.7 million in 2014.
Full-year results were also knocked by costs of its three-year investment programme to upgrade its UK shops and digital arm.
Ladbrokes is attempting to complete a merger with Coral, but the deal still needs to get regulatory clearance and the pair are likely to have to sell shops to achieve the thumbs up from the Competition and Markets Authority (CMA).
On Wednesday, the CMA put back its provisional report on the merger until mid-May.
Steve Clayton, head of equity research at Hargreaves Lansdown, said: "Current trading at Ladbrokes is encouraging, but in truth, a little bit of a sideshow in the short term.
"The real story here is whether the merger with Coral will be allowed, and for that news we must wait a while longer. If it does go through, the deal could be transformational for the group."