Rank Group plans to cut costs after profit warning
Rank expects underlying operating profit to fall by up to 75 per cent due to weaker performance at Grosvenor Casinos.
UK.- Rank Group has announced that it will begin cutting costs due to an expected drop in operating profit due to weak performance at Grosvenor Casinos. It expects underlying operating profit to fall by up to 75 per cent to around between £10m to £20m for its current financial year ending June 30, compared to FY 2021/22 profits of £40m.
In a trading update for the five months to 30 November, it said like-for-like net gaming revenue (NGR) was up just 1 per cent year-on-year, with growth online and at its Mecca and Enracha venues helping to offset a drop in revenue at Grosvenor Casinos.
Grosvenor is dragging revenue down due to high operating leverage and its importance to the group. Q2 trading was “weaker than expected”, with weekly average NGR of £5.8m only slightly up on Q1. Rank had expected to see a sustained improvement, but customer spend per visit remains down and is now expected to take longer to recover given the current economic situation.
Mecca Bingo saw weekly average NGR on par with Q1 with customer visits up 4 per cent. The World Cup and cold weather caused some slowdown along with the cost of living crisis.
In Spain, Enracha did well with NGR rising 27 per cent thanks to a return on investment in electronic products. Performance is expected to remain strong. Rank Digital saw NFR rise 11 per cent (10 per cent in the UK) aided by the launch of YoSports in October 2022 and growth of YoBingo.
Rank said cost increases remain broadly in line with expectations at around £50m largely due to wage and energy inflation, but that it would seek to cut costs.
Chief executive John O’Reilly said: “Weak consumer confidence and pressure on disposable income is resulting in a tougher-than-expected trading environment for our UK venues businesses, particularly in Grosvenor where we are seeing customers spending less per visit.
“Whilst we expect these challenges to continue to impact our recovery into the second half of the financial year, we have implemented a series of measures to deliver incremental cost savings and to drive revenues.
“We remain committed to our roadmap of investing in initiatives that will ensure the long-term recovery and prosperity of the Group. These include delivering new products in our UK venues, enhancements to the design and facilities of some of our casinos and upgrades to the table gaming and electronic offering.
“Our digital team is now fully focused on delivering the improvements available to our UK and Spanish business following the successful migration of all our brands onto our proprietary platforms.”
Earlier this month, Rank’s Grosvenor Casinos revealed a major rebranding as it aims to convey a more modern experience. The revamp includes a completely redesigned logo, comprising an abstract G in a circle.
Grosvenor said the new branding was “stylish” and “fun” and aimed to “move away from the stereotypical casino experience” and the “traditional look and feel” of casinos. The rebrand will be applied at Grosvenor’s 52 land-based casinos and online.
Meanwhile, Rank Group has lost its appeal against a £5.8m fine issued by the Gambling Commission to its Daub Alderney subsidiary last year. The British regulator had fined the online-focused subsidiary for social responsibility and anti-money laundering failings.
The fine was announced in September last year in relation to failings that took place between January 2019 and March 2020. The regulator had found that Daub Alderney failed to apply appropriate measures to identify or prevent problem gambling.
