Rank Group has issued a profit warning ahead of its full-year results as land based operations continued to underperform in a difficult trading environment. In what is always a volatile market, it was casinos that fielded the hit, whilst bingo slipped just two per cent.
In a financial statement Rank Group has warned that poor performances from its land based Mecca Bingo and Grosvenor Casino brands will reduce expected full year profits.
In the last 13 weeks to April 1 2018 the group’s total revenue fell by two percent with Mecca operations dropping by two percent, and its Grosvenor brand by nine respectively.
This late-stage shortfall negatively impacted what had been a financial year of largely flat revenues for the group, with any drops in the land based sector being made up for a 17 percent increase in its online operations.
In a statement, Rank said: “Following the group’s 2017/18 interim results statement, both UK venues businesses have been impacted by weaker than expected visits which have been compounded by two periods of cold weather. Grosvenor Casinos’ underperformance has also been exacerbated by a negative contribution from its VIP players.
“The board is cautious about the UK consumer outlook and as a result expects the group’s UK venues to continue to be impacted for the remainder of the 2017-18 financial year and into 2018-19.”
Owing to these performance Rank stated that its full year profit expectations will be in the range of £76m-£78m a notable drop from last year’s figure of £83.5m and the analyst consensus of £83m
“As highlighted in Rank’s recent interim results statement, a number of key operational actions have been identified and are being put into place to improve Grosvenor’s performance over the medium to long term.”
Market uncertainty spurred by declining high street footfall, lack of real wage growth under the incumbent Tory government and the economic hammer blow Brexit has dealt to consumer and investor confidence have all lessened the availability of the leisure pound in the last 12 months.
In an effort to remedy these issues Rank has launched its high street Luda Bingo brand, although the three operational venues to date have posted mixed results.
Analysts at the gambling industry research group, Regulus Partners, were prosaic in the assessment, conceding that the hits were hefty blows, but not necessarily below the belt. That could come from within and the drive for online revenues. The analysts commented in a release: “In the round, snow, lucky high rollers and a soft consumer environment can legitimately cause a profit warning three-quarters of the way through the year, given the high fixed costs of retail gaming business.”
However, in the same note the group warned that the ever-increasing drive towards online betting driven by what is perceived as “a complete absence of meaningful retail innovation” are also bound to be factors.