888 Initiates Strategic Review for US B2C Operations, Mulls Potential Sale

Author:

Patricia Bell

|Published: March 6th, 2024

888 announces the commencement of a strategic review for its US B2C operations, contemplating the possibility of selling part or all of the business to explore potential alternatives for value creation.

The review will explore options like a partial or total sale of the US B2C operations, a controlled exit, or other strategic transactions.

The existing B2B arrangements in the US will remain unaffected by this review.

CEO Per Widerström stated that the intense competition and the need for scale in the US market require substantial investment for profitability, prompting the strategic review.

The company plans to provide an update on its plans for the broader group in late March, coinciding with the publication of its full-year results for 2023.

888 is currently active in four states – Colorado, Michigan, New Jersey, and Virginia.

Despite its partnership with Authentic Brands Group (ABG) to operate under the Sports Illustrated brand in certain states, the gross profit margin in the US is lower than the group level due to high operating costs and fierce competition.

As part of the strategic shift, 888 has mutually agreed to end its partnership with ABG, agreeing to pay $25.0m in cash and an additional $25.0m between 2027 and 2029.

This decision is expected to result in operating cost savings of approximately $6.0m to $7.0m annually in 2024 and 2025.

The strategic review follows an earlier announcement of redundancies at 888 in January, along with an 8% drop in revenue for 2023.

Despite uncertainties, 888 maintains a positive outlook for FY24, anticipating strong revenue growth online and cost savings from a global cost savings program launched in December 2023.