Another muted set of numbers from the Rank Group has seen the value of the company’s stock slide – but its landed division may still hold the key to success online.
A trading update from the Rank Group had investors less than enthused last week, with numbers for the past 16 weeks detailing a 5 per cent drop in like-for-like takings.
The news saw the share price of the FTSE-listed operator dip by 4 per cent, as the market reacted to muted performance from both its Mecca Bingo and Grosvenor Casino brands.
Rank attributed a 5 per cent dip in bingo business to declining visitation, and a more pronounced fall (7.2 per cent) in landed casino revenue to a drop-off in VIP handle and margin.
There were some positive take-aways, however:Mecca’s digital platform enjoyed continued growth – with revenues swelling 6.4 per cent for the period.
Meanwhile there were encouraging signs from Rank’s recent international digital acquisition YoBingo – an established presence in the Spanish market – which posted like-for-like gains of 46 per cent. In keeping with its changing business model,the overall contribution of Rank’s digital business is growing – with online takings now accounting for over 13 per cent of total revenue.
A statement from Rank accompanying the latest stats said only that it was continuing with a programme of cost- savings which it hoped would mitigate Grosvenor’s shortfall in the next full-year accounts. But market observers were less optimistic. In an inter- view with CityAM, equity analyst Nicholas Hyett of Hargreaves Lansdown argued that Rank’s landed woes were a direct consequence of some endemic obstacles, namely “the convenience of online alternatives and [the] relatively sub-prime locations that many of its real-world venues occupy.”
Then again, Hyett didn’t write off Rank’s landed division – insisting it was core to the company’s remote potential.
“Rank’s USP is it’s physical presence,” he said.“Online it has lots of so-called ‘digital native’ competitors – it needs its physical casinos and bingo halls to set it apart from the crowd if it’s going to get a slice of the growing digital market.”
It’s been an undeniably rough year for Rank. Due-diligence measures enforced from last autumn seemingly took the wind out of the sails of its landed VIP business, contributing to a plunge in profit of 40 per cent for the year ending June 30.
Nonetheless, newly re-appointed CEO John O’Reilly has maintained that Rank is “undervalued” and has “real opportunity for development and growth.”