Credit Suisse has released their latest analysis of Tatts Group as part of their regular research on public companies. This report is a must-read for all newsagents with lottery products. On page four is this commentary:
Margins continue to expand with internet sales growing about 170bps vs. pcp as a proportion of total turnover (now 10.8%). We expect internet penetration may reach 14% over the next two years, providing about 50bps of margin expansion.
Despite this trend, Tatts will need to grow the dollar value of commissions over time, in our view. Tatts’ agency network is responsible for over 85% of sales and therefore an integral part of its distribution. It would not be in Tatts’ interest to see falling commissions contribute to agency closures.
Here are two comments which should interest newsagents. The first comment on online sales growth needs to be understood by newsagents. The second comment on commission is interesting and something those representing newsagents could leverage.
The report also shows the importance of jackpots on lottery sales.
I am grateful to Credit Suisse for sharing the report with me.