Confidence growing at Ladbrokes, says CEO Mullen

Ladbrokes chief executive Jim Mullen (pictured) believes the operator’s underlying metrics proves the firm is on track to return the digital business to bottom line growth, although profits are unlikely to return until 2017.

Speaking to eGaming Review shortly after announcing an £11.5m H1 digital operating loss, Mullen said the operator had made operational progress, however, much needed investment in product and marketing meant a return to profits was still some way off.

“The H1 numbers are what they are,” Mullen said. “We’ve obviously had some headwinds through Point of Consumption but I want to focus on the underlying numbers which, excluding the World Cup, saw stakes up more than 20%, mobile up more than 80% and actives up over 9%.

“Part of my strategy is to grow our recreational customer base and that will require investment so you’ll see customer metrics come through before profits in 2017,” he added.

Mullen said the operator’s 26% decline in sportsbook revenues illustrated Ladbrokes’ need to expand its number of recreational customers, particularly in light of rival William Hill reporting an 11% increase in sportsbook revenues across the same period.

“They [William Hill] have got a larger [customer] base and our strategy is to grow our recreational base,” Mullen said. “That’s the challenge we have at Ladbrokes – we have to acquire far more recreational customers, we know they are out there and we need to get them back,” he added.

To do this Mullen said Ladbrokes has been confident enough to raise marketing to 30% of net gaming revenues (NGR) and will focus not only on acquiring new customers but also increase the frequency of play of current customers and expand the number of retail punters using Ladbrokes online.

“If you look at our retail estate, only 11% of our customers play with our products online so we are under indexed there. We have this massive distribution network and a fantastic opportunity to build an affiliate network which could be the biggest in the UK,” Mullen said.

“So it’s not just about new customers, it’s about increasing share of wallet compared to our rivals,” he added.

Since taking the reins from predecessor Richard Glynn in April, Mullen has not shied away from criticising the operator’s previous strategic failures and has stated on more than one occasion that his strategy will be more effective than the one he inherited.

Although Mullen said the 18 months spent as digital director under Glynn were productive and enabled him to build a base on which future growth could be built.

“We delivered some operational updates, we delivered the mobile product three months after I started, we built important relationships like the one with Playtech and the growth in the digital business last year was positive,” Mullen said.

“It is because of that platform and growth that we’ve been able to launch new products and why we’ve got confidence in raising our marketing to 30% of NGR – all of that happened in the previous 18 months before I became CEO,” he added.

Mullen believes the Ladbrokes ship has been steadied and he says morale among Ladbrokes’ staff and shareholders is high and he feels he has the mandate to implement his three-year strategy.

But looking at the H1 results there is also a sense of déjà vu amongst many analysts who will want to see drastically improved results before sharing his enthusiasm.