Online car competitions company Best of the Best (BOTB:AIM) has warned profits for the year to April 2022 will be around 62% below market forecasts, news that sent the shares careering 46% lower to 820p on Friday.
The online operator of competitions for cars and other lifestyle prizes blamed disappointing recent new customer registrations and the higher cost of recruiting new players for the massive downgrade to guidance.
WEEKLY SALES SOFTEN
As Shares reported here, full year results in June prompted a 40% share price slump after Best of the Best spooked the market with the comment it had seen ‘somewhat of a reduction in customer engagement’ since the Covid-19 lockdown ended on 12 April.
Today, the company said it has seen a 15% reduction in average weekly sales since the start of the new year compared with the last 15 weeks of the prior financial year to April 2021.
Combined with higher customer acquisition costs, this is hurting the highly operationally geared business, which continues to experiment with the marketing mix to boost business rather than slash marketing budgets to meet short-term expectations.
Best of the Best stressed: ‘It is worth noting that the summer months are typically a low point and there is a seasonal lull in customer engagement and revenue generation, which we expect to improve over the coming months.’
However, the new guidance provided today for the year ending 30 April 2022 ‘is circa 62% below current market forecasts with a commensurate impact on the following financial year’, the company warned.
THE BROKER’S VIEW
Finncap commented: ‘Like most other consumer companies, BOTB is discovering that consumer behaviour is proving harder to predict as the world reopens, an exercise made tougher as the summer is seasonally quieter for BOTB with the betting companies being particularly active around the European Football Championships.’
Following the update, the broker slashed its 2022 earnings per share forecast by 63% to 53.3p and its 2023 estimate by 61% to 64.1p and also reduced its target price from £31 to £14.
