Mecca Bingo owner Rank warns over sliding profits
16 December 2022, 09:06
The company saw shares slide in early trading on Friday after it told investors that profits are set to drop by more than half.
Bingo and casino firm Rank Group has warned over profits after the World Cup and colder weather kept customers away from its venues.
The Mecca Bingo operator saw shares slide in early trading on Friday after it told investors that profits are set to drop by more than half over the current financial year.
It expects to deliver like-for-like underlying operating profits of between £10 million and £20 million for the year to June, compared with £40.4 million over the previous year.
The company said the slump has been particularly driven by its Grosvenor Casinos business.
Bosses at Rank said Grosvenor has experienced “weaker than expected” trading over the current quarter, despite “some improvement” in the last few weeks.
Trade was marginally ahead of the previous quarter, but the group had expected further improvement in the second quarter and the into the rest of the financial year. However, this has been affected by lower spend by customers per visit.
Rank said Mecca has witnessed a 4% rise in visitor numbers in the past five months.
But it added that net gaming revenue has weakened recently “due to lower visit numbers, impacted by the World Cup and colder weather, as well as the ongoing cost-of-living pressure on consumers”.
Meanwhile, the company hailed “good growth” in its online business, which saw net gaming revenues increase 11%, with 10% growth in the UK.
The firm also highlighted continued cost increases, which remained in line with expectations at around £50 million, driven by higher wages and energy costs.
Rank chief executive John 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.”
Shares in the company moved 9% lower in early trading on Friday.
