Challenging trading conditions hit The Rank Group

UK casino operator The Rank Group reported its Grosvenor casinos, particular those in London, had been impacted by difficult trading conditions in the second half of the year.

A poorer than expected second half performance of its Grosvenor casinos caused the group to recently reset its profit guidance for the full year. Underlying operating profit was £40.4m for the year to the end of June 2022, in line with the recent guidance.

John O’Reilly, chief executive of The Rank Group said: “It was a challenging year for our UK venues businesses, with unexpectedly softer trading across the Grosvenor estate in the second half of the year. Our nine London casinos, which account for over 38 per cent of Grosvenor’s revenue in normal trading conditions, have seen very weak customer volumes with overseas visitors few in number, and only starting to return in the final few weeks of the year. The lower than expected Grosvenor trading in H2 led us to reset full year operating profit expectations as announced in Q4.”

Underlying venues NGR was up 209 per cent year-on-year but still down 19 per cent on 2019, reflecting the continued impact of, and gradual recovery from, the pandemic, the group said.

While the group’s digital NGR was up 4 per cent and active cross-channel customers up 178 per cent, the group pointed to higher energy costs and higher inflation as likely to impact the business going forward.

“Whilst we have been seeing improvements in London in recent weeks, the trading environment across the UK is likely to remain difficult in the months ahead with inflationary pressures squeezing consumer discretionary expenditure and cost increases, particularly in energy prices, putting pressure on profit margins,” said O’Reilly.

“However, we are taking actions to drive further efficiencies in the venues businesses, and we are seeing strong revenue growth in properties which have recently benefitted from our accelerated capital investment programme.

“Performance in our digital business continues to improve against a difficult market backdrop. The transfer of the Rank brands to our proprietary technology platform is supporting revenue growth and a strong improvement to operating margins, which we expect to accelerate with the migration of the Grosvenor brand in the coming weeks.

“We were disappointed by the delay to the publication of the UK Government’s white paper on gambling regulation. The land-based casino and bingo sectors are in need of long overdue modernisation of the regulations, which govern their operation, something that the Government recognised in its objectives for the review. We expect Rank to be well positioned to benefit from the review when it concludes.”