Casino and bingo operator Rank Group (RNK) provided a sluggish trading update for the third quarter through March 2022, prompting management to downgrade full year profit guidance.
Softer than expected trading and increased costs pressures means the company now expects earnings before interest for the year to 30 June 2022 to be in the range of £47 million-to-£55-million, roughly 15% below prior guidance.
The shares plunged 9% lower to 117p and languish around 60% below their pre-pandemic level.
Chief executive John O’Reilly commented: ‘The performance of our venues softened in March, and this has continued into the first few weeks of Q4, impacting our current expectations for our full year performance.
‘We recognise the pressures on UK consumers but are confident that the improvements we are continuing to make to the customer proposition and the investments in our venues, alongside the gradually reducing impact of the pandemic and, with it, the return of overseas customers, position us well for the year ahead.’
SLOWER THAN EXPECTED RECOVERY
In the three months to 31 March 2022, net gaming revenues at the Grosvenor casinos were down 14% compared with pre-pandemic levels while Mecca bingo revenues were 25% lower.
Despite restrictions in Spain the Enracha business proved resilient with net gaming revenues down 2% compared with 2019, reflecting improvements to the offering.
The company reiterated its expectations of seeing a ‘strong path’ to recovery to the pre-COVID-19 levels.
EXPERT VIEWS
Greg Johnson, leisure guru at Shore Capital, said although today’s update was clearly disappointing, he sees ‘numerous tailwinds including further digital cost efficiencies, the return of international visitors to London and the potential benefits from the step-up in its Transformation programme.’
Richard Stuber at Numis said recent share price weakness offered a buying opportunity. Stuber commented: ‘Rank is the only gambling operator which could react positively to the Gambling Act Review if the government harmonises casino licences allowing more machines to be installed.’
