Rank shares plunge on weak trading update
Operator’s executive board adjusts its group FY18 profit forecast to £76m despite strong digital growth
Rank Group this morning reported a 2% year-on-year drop in group revenues for the 13 weeks to 1 April 2018, although digital revenues continued to grow by double digits.
Retail revenues fell 2% and 9% for Mecca and Grosvenor respectively which the board attributed to fewer visits due to the cold weather.
However, digital revenues continued on a steady uptick of 17% during the period as the operator continued to overhaul its online product and launch new features such as Dual Play.
The board has adjusted its profit forecast for the financial year to £76m – £78m as it expects land-based venues to continue to be impacted throughout the financial year.
Analyst firm Goodbody had previously estimated Rank’s FY18 profit to be in the range of £84m.
In 2017 the operator completely restructured its retail management team in an effort to streamline operations and cut costs internally.
The board said it would continue to carry out key operational actions to improve Grosvenor’s performance over the long-term.
Analyst Peel Hunt this morning said: “The digital business continues to deliver strong growth in a competitive UK market for online gambling.
“However, today’s warning is likely to undermine confidence in the trajectory of trading and we are lowering our target price accordingly to 245p from 265p to reflect this.”
Longstanding Rank CEO, Henry Birch, announced his departure from the firm in March to take up a role with online retailer Shop Direct.
Regulus Partners said with the loss of Birch, Rank joins a growing list of UK gambling businesses suffering from significant senior management disruption.
Rank’s share price was down 14% at the time of writing.