Rank Group notes FY23 risk over faltering UK land-based operations

Rank Group has readjusted its full-year operating profit expectations to between £10m and £20m as the cost-of-living crisis continues to impact the operator.

Delivering a trading update for the five months to 30 November, Rank Group revealed the difficulties it has faced with its land-based operations as expectations of improved net gaming revenue (NGR) failed to materialise.

Group NGR for the period was up 1% year-on-year (YoY), with the impact of Grosvenor venues offsetting growth across Mecca venues, Enracha venues and the firm’s digital arm.

Rank Group noted a weekly average NGR of £5.8m across its Grosvenor venues, which is only marginally above of the levels in Q1.

Rank Group said: “We had expected Grosvenor venues to have continued to improve throughout Q2 and then into the second half of the year, but this improvement has not yet materialised, driven by lower customer spend per visit.”

The firm also noted a recent downturn in weekly average NGR at its Mecca venues due to the World Cup, the colder weather in the UK and the ongoing cost-of-living crisis.

However, there was positive news from Spain, where Rank’s Enracha venues posted a 27% YoY jump in NGR due to investment in product.

Additionally, the group’s digital business jumped 11% following the migration of Grosvenor onto Rank’s proprietary technology platform.

However, in its outlook for the remainder of the 2022-23 financial year, Rank Group stressed the difficulties it has faced in its UK land-based arm and the potential impact it could have on the overall business.

Rank noted a return to growth at Grosvenor venues would take longer than previously expected, while the year-to-date performance in Mecca venues also poses a “level of downside risk” to overall operations.

The company added: “Due to the high operating leverage within Grosvenor, and its relative importance to the group as a whole, movements in its NGR will have a significant impact on the group’s operating profit for the year.”

Touching on the results, Rank Group CEO John O’Reilly noted that while there are current difficulties, there is a robust long-term plan in place to deliver prosperity for the group.

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,” he added.