Rank Group stock tumbled on Thursday after the U.K.-listed group warning of challenging trading conditions into next year due to rising prices.
The group released a trading statement saying that for the first quarter of its financial year, ending Sept. 30th, net gaming revenue (NGR) rose 2 percent to GDP165.7 million. Revenue from the group’s digital division was up 13 percent, while it fell two percent in its physical venues.
Rank said its Grosvenor venues saw higher visitation during the quarter, but spend per visit was down and net gaming revenue dropped by 5 percent. London performed strongly, with NGR up 21 percent, but this was offset by a 17 percent drop outside of London, where customer spending was weaker.
As of midday trading, the shares were down more than 9 percent at 58p after touching 57p earlier in the day.
The company said it expects customer discretionary spending to remain under pressure this year, with inflation to remain high for some time. It said it expects to see the impact on its business, particularly in Grosvenor venues outside of London for some time.
Rank sees high energy costs
Rank also warned of its own rising energy costs. It expects costs to be GBP34 million this financial year, compared with GBP23 million a year earlier, unless the government extends its Energy Bill Relief Scheme beyond March.
Other inflationary pressures include wage inflation, food input price increases and supply chain pressures all pushing up costs.
FY23 costs will also be higher due to the non-recurring government support of rates relief and furlough payments received in the first quarter of the prior financial year.
“Whilst it is a challenging trading environment and we expect this to continue in the months ahead, we remain committed to delivering Rank’s market leading, exciting and entertaining proposition to our customers,” said CEO John O’Reilly. “The Group has a number of key initiatives underway to improve long term revenues. These include some key refurbishment projects and new electronic roulette and jackpot games in Grosvenor; improving the gaming machine offering in Mecca; increased personalisation and a stronger live casino offering in the UK digital business and the recent launch of Yo Sports in Spain. The Group has the benefit of a strong balance sheet, enabling us to continue investing in the business through this period.”
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