Click here to access the full year results – investor presentation from Tabcorp. Overall, Tabcorp shareholders will, I suspect, be happy with the results as they contain plenty of good news.
Of interest to lottery retailers will be the growth in digital (online) from 23.5% in FY2018/19 to 28% in FY2019/20. It hit 20.9% of revenue in the fourth quarter of the financial year.
Growth in revenue overall for Lotteries and Keno was 1.8%. Growth in digital was up 19% on the previous year. I guess that puts a different light on their reasoning for the 4% decline in retail revenue noted in the report. While retail closures would have impacted, I’d be surprised if closures accounted for a major portion of the decline given that newsagencies were not required to close.
This annual report is not good news for lottery retailers. The transition of lottery customers to online continues. While Tabcorp will point to the omnichannel commission arrangements, they do not deliver sufficiently for the additional work required.
My advice to lottery retailers is – work on your business to attract non-lottery shoppers to purchase good margin products that you carefully select and that can play as a basis to attract return business from those shoppers. This is upside you can create.
While the lottery traffic and revenue are appealing, Tabcorp must put the needs of its shareholders ahead of everyone else.
No surprise here Mark and your closing advice is spot on. Interesting to read an EBITDA for the year of of $995 million despite the challenging year for licensed venues, TAB agencies and on course outlets. Also interesting to read about their “ongoing support of retail partners through the challenge of COVID 19 and maintaining COVID safe operations” and the tax relief provided by state governments.
The Tabcorp board have a clear strategy of driving online sales which reduces employment costs/ franchisee fees and therefore increases their bottom line and shareholder return. Clearly in the case of lotteries this strategy has been quite successful and sales growth continues to accelerate. Like you say the online growth strategy is concerning for all lotteries agencies. The reduction in employment and payroll taxes should also concern all state governments. Time to balance the playing field by increasing taxes on Tabcorp’s digital sales.