A drop in visitation due to cold weather and a run of good luck for its high spending casino clients has seen British operator Rank Group’s profits tumble.
The Mecca Bingo and Grosvenor Casino operator said that overall revenue for the 13 weeks to 1 April 2018 fell by two per cent.
It has reduced its full-year operating prediction to between £76m and £78m down from the previously pitched £85m.
Revenues from Rank’s casinos fell nine per cent in the 13 weeks to April 1 due to a ‘a negative contribution from VIP players’ while revenue at its bingo halls fell by two per cent.
Digital gaming showed growth of 17 per cent.
Rank said: “Both UK venues businesses have been impacted by weaker than expected visits which have been compounded by two periods of cold weather. 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.”
The group said it had identified ‘a number of key operational actions’ which will improve results.
These include the ‘roll-out of single account and wallet in Grosvenor Casinos’, developing its digital portfolio and investing in its existing properties.
The group is currently on the lookout for a new chief executive after Henry Birch ‘s resignation in order to pursue a role at Shop Direct Group.
Stockbrokers Goodbody said it would reduce Rank’s profit forecast to £77m from £84m.
“The Grosvenor retail performance is a disappointment, but VIP activity has proven to be volatile in the past and we remain of the opinion that over time this business has resilient and stable cash flow characteristics,” it explained.
Victoria Pease, analyst at Edison Investment Research, said: “Rank is trading on a multiple of 5.7x, below the peer average of 10.2x. Although it faces more retail challenges that its pure online peers, it has more digital upside, the core business remains highly cash generative and now has a net position of £4m which underpins a solid dividend policy and provides the firepower for potential M&A.”