Rank Group said its U.K. operations are experiencing a “tougher-than-expected” trading environment and it expects profit this financial year to be less than half of the prior-year.
The U.K.-listed group said it sees operating profit for the year ending June 30th, 2023 of between GBP10 to GBP20 million. That compares with GBP40.4 million a year earlier.
“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,” CEO John O’Reilly said in a trading update statement.
“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.”
Grosvenor accounts for about 45 percent of group revenues.
U.K. feeling cost of living crunch
The U.K. is one of the worst performing economies in the industrialised world, with gross domestic product shrinking by 0.3 percent in the three months to October. In recent weeks, the World Cup and freezing weather have added to cost of living pressures in deterring players.
For the five months to the end of November, Rank reported a 1 percent gain in group net gaming revenue.
The company said there has been an improvement at Grosvenor in recent weeks, but trading in 2Q22 has been weaker-than-expected. Weekly average NGR has been GBP5.8 million, only slightly higher than the prior quarter.
It had expected to see some improvement into the second half, but that has yet to materialise, it said.
Ranks’s Mecca casinos performed better with visitor numbers up 4 percent, although it said that in recent weeks there has been a slowdown in visitation. On the other hand, Rank’s Spanish unit and its digital business saw good growth.
Enracha posted a 27 percent gain in NGR as investment into electronic products has driven growth. The digital business grew by 10 percent.
Rank said its Spanish customers have not felt the cost of living pressures as much as those in the U.K.
“We remain committed to our roadmap of investing in initiatives that will ensure the long-term recovery and prosperity of the Group,” O’Reilly said. “These include delivering new products in our UK venues, enhancements to the design and facilities of some of our casinos and upgrades to the table gaming and electronic offering. Our digital team is now fully focused on delivering the improvements available to our UK and Spanish business following the successful migration of all our brands onto our proprietary platforms.”