Best of the Best plunges on dire profit warning
Best of the Best shares plunged after it warned annual profit would be more than 60% less than expected after customers spent money elsewhere and the cost of attracting new players rose.
Best of the Best
530.00p
16:55 23/08/23
FTSE AIM All-Share
753.12
16:50 25/04/24
Travel & Leisure
7,552.90
17:09 25/04/24
The competitions company said revenue from established customers signed up before May 2020 was 6% lower in the 15 weeks to 8 August than in the 15 weeks to the end of April. These customers are taking advantage of the end of lockdown, major sporting events and travelling to spend money, the company said.
Best of the Best runs raffle-style competitions that give punters the chance of winning cars, cash and luxury watches. It said the cost of acquiring new customers has risen sharply with social media advertising costs up by as much as 60%. New customer revenue is 40% lower than in the 15 weeks to the end of April.
The result is that average weekly sales are down by 15% compared with the 15 weeks to the end of April meaning annual profitability and earnings will be about 57% lower than the year before. Profit will be about 62% less than the average analyst forecast, Best of the Best said.
Best of the Best's AIM-traded shares fell 41% to 906p at 08:04 BST
"We are hopeful that the cost of acquiring new players will normalise before too long and our flexible model means we are able to adjust to a higher cost of new player acquisition if necessary, the company said. "We remain focused on our growth strategy which together with new initiatives, the ongoing engagement of our large and loyal database, and a return to more normal patterns of customer behaviour should allow for profitability to increase and for margins to recover."
The company said its balance sheet was strong with more than £6m of cash at 12 August.