Rank’s digital business up 10% as group profits dive
CEO John O’Reilly insists Rank’s “underlying potential” can be reached through digital growth
Rank Group’s UK digital business grew 9.9% last year as overall revenue fell by 2.3% to £741m and profits plummeted by more than 40% in FY18.
Digital performance was primarily driven by a 10.9% upturn in Mecca Bingo as a result of a successful ‘Meccarena’ marketing campaign and ongoing investment in meccabingo.com, while online revenue for grosvenorcasinos.com also grew 8.2% in the last year.
But strong H1 growth in Rank’s digital business has been offset in H2 by more stringent customer compliance measures and due diligence procedures, while grosvernorcasinos.com suffered particularly in H2 due to insufficient marketing investment and a technical issue which meant valuable, multi-channel customers could not be contacted.
Digital operating profit fell by £1.8m year-on-year to £20.9m following the introduction of remote gaming duty (RGD) on customer bonuses.
Overall, it was a challenging year for Rank Group. A combination of low win margin and extreme weather conditions meant profits nosedived to £50m, down from £84.5m in 2016-17.
The Group responded by appointing industry veteran John O’Reilly as CEO in April, who said today: “I joined Rank because of its underlying potential.
Rank Group CEO John O’Reilly
“With the backdrop of a disappointing performance in 2017-18, we are now moving quickly to identify the key priorities which will begin to realise the significant underlying potential that I have now seen first-hand since joining the Group in early May.
“We are taking steps to increase our focus on the customer, to accelerate growth in the digital business, to drive cost efficiencies across the business and to strengthen our organisational capabilities.
“This will be delivered within a transformational programme framework, which will ensure that we deliver a growing Rank Group that is fit for the future,” he added.
Regulus Partners analyst Paul Leyland said Rank must focus on implementing a strong omni-channel strategy.
He said: “Rank has strong latent potential to drive a genuinely omni-channel gaming business in an increasingly digitised consumer environment.
“However, the current offer is not proving fit for purpose and previous attempts at tweaking have had little positive effect.
“The stickiness of gaming customers has given Rank the chance to roll the dice again to deliver meaningful omni-channel growth, but given the rapid pace of consumer, technology and fiscal-regulatory change, this may well be the last chance,” added Leyland.