Online Growth Can’t Prevent Profit Warning from Rank Group

UK bingo and casino operator the Rank Group has issued a profit warning despite reporting positive growth from its digital platforms.

Rank Group profit warning.

The Rank Group has issued a profit warning, despite its online portals showing year-on-year improvements. (Image: moziru.com)

In a report published on April 5, the gaming brand noted a 2 percent drop in like-for-like revenue in the 13 weeks to April 1. According to the figures, the drop in overall earnings was due to a slowdown in live takings.

Adverse Conditions Put a Freeze on Rank’s Revenue

Two cold snaps have been blamed for a decrease in footfall to Rank’s Mecca Bingo halls. Additionally, the operator’s Grosvenor Casino chain have blamed “negative contributions” from high rollers for dragging down the expected earnings.

The news will come as a blow to Rank which announced last month that it was losing its chief executive, Henry Birch. However, despite a downturn in live earnings, things in the online arena appear to be positive.

Although it wasn’t enough to cancel out the shortfall from the group’s live venues, Rank Interactive’s revenue saw a 17 percent year-on-year improvement. The report doesn’t go into specifics about the how or where the improvements occurred, Grosvenor Poker and Casino have continued to improve their products.

In the casino realm, a new selection of jackpot slots has been added to the mix in recent monts. For poker players, the momentum of the Grosvenor UK Poker Tour (GUKPT) has given rise to a slew of online satellites that casual players have been keen to take advantage of.

Changes Afoot Following Revenue Report

Despite the impressive performance by Rank’s online portals, executives issued a pessimistic warning to shareholders.

“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,” read the April 5 statement.

Those at the top have promised a number of “operational changes” to combat the recent downturn, but other factors may yet impact the company’s future results. The government’s much-anticipated fixed odds betting terminals (FOBTs) report is due to be published in the coming weeks and could determine how lucrative Rank’s live venues are.

By cutting the maximum stake from £100 to somewhere between £2 and £30, Rank and its peers would generate significantly less revenue from their betting terminals. Although Mecca Bingo halls and Grosvenor Casinos don’t rely on FOBTs as much as betting shops, any changes would still affect Rank’s bottom line.

“Taking all the above into consideration, management now expect the group’s full year operating profit to be in the range of £76m-£78m,” the April 5 profit warning concluded.

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