GVC’s Poor Retail Figures Buoyed By Strong Online Performance
GVC Holdings, owner of the partypoker brand among many, released its interim financial figures for the first six months to June 30, 2020, on August 13.
It should not be surprising to discover the majority of the company’s key financial indicators were down compared to the same period in 2019, some falling by double percentage points.
The gambling industry around the world has been battered by the ongoing COVID-19 pandemic. Majors sporting events, the bread and butter for companies with sportsbooks, have only just begun returning to some sort of normality.
Betting Shops Were Forced To Close
The British Government ordered all non-essential business to close their doors to the public in March. Betting shops are considered non-essential so GVC’s vast estate of moe than 3,000 shops, mostly Ladbrokes and Coral, closed and remained so for more than three months. Ultimately, this resulted in a 50% drop in like-for-like Net Gaming Revenue.
GVC’s European Retail Net Gaming Revenue also plummeted 48%, which reflects forced venue closures in Europe.
Punters flocked online to continue gambling and this benefited GVC with Online Net Gaming Revenue increasing 21% with double-digit growth in all major markets. Gaming, which includes casino and online poker, soared 31%, for example.
Investors learned GVC achieved its target of operating at cash neutral throughout the lockdown period thanks to its decisive response to the impact of COVID-19. They also learned Ladbrokes and Coral brands have now been fully migrated onto the GVC technology platform, helping to accelerate the estimate £20 million worth of cost saving synergies within the group.
New CEO Lays Out Plans For the Future
New CEO, Shay Segev, who took over the reins from the outgoing Kenny Alexander in July 2020, address the company’s shareholders in a brief statement.
“Given the unprecedented trading environment, GVC has delivered an encouraging performance in the first half, underlying the strength of our diversified business model and the expertise, adaptability, and dedication of our people.”
“These results show that we have a strong foundation. As a technologist, I have a huge admiration for what Kenny and the rest of my colleagues have achieved but I am also determined to pursue a programme of continuous improvement as we focus on our four technology-enabled priorities. These are leading the US market, organic growth, expanding into new markets, and being the most responsible operator in our industry. Our industry-leading technology will enable us to grow responsibly and sustainably, using our data-driven customer insights to ensure all of our customers have an enjoyable and safe experience while gaming with us. That is how we will deliver greater and more sustainable value for all our stakeholders.”
Shareholders initially reacted positively and the company’s share price increased 785.60 pence per share to 800.00 pence per share. Those gains have been wiped out this morning with shares in GVC Holdings currently trading at 768.26 pence per share. This could be due to automatic sale orders coming into play once the share price hit the round figure of 800.00 pence, however. The fact the company has decided again paying a dividend could also be affecting the share price.