17th Oct 2013 08:24
LONDON (Alliance News) - The Rank Group PLC Thursday said that like-for-like sales in the 15 weeks to 13 October this year were down 7%, causing share prices to tumble in early trading.
Total revenues for the period were up 15%, driven by strong revenues from its Grosvenor Casino chain, although the brand reported a 7% fall in revenues on a like-for-like basis.
The Rank Group attributed the decline in comparable revenues to exceptionally hot weather in July, causing visitor numbers to reduce across its venues, a lower casino win margin in London, and a disappointing performance by Mecca's venues and digital channel.
Despite this, said the firm, the 19 recently acquired casinos have performed well and integration has been successfully completed.
In order to combat the disappointing start to the year and to mitigate the impact of the results, the management team is taking revenue improvement and cost reduction actions, particularly in the Mecca brand, which will commence in the second half of the year.
While expecting stronger second-half results as the impact of these measures and capital investment programme are felt, the company expects operating profit to be marginally below market expectations for the full-year. The firm added, "the Board expects the first half of the financial year to be materially below that reported in the corresponding period last year."
Within the Grosvenor Casino brand, like-for-like revenue during the 15-weeks declined by 7%, while total revenue increased by 35% as a result of the newly acquired casinos. Venues recorded a 6% drop in customer visits due to the hot weather and an 8% fall in like-for-like venues revenues, with comparable spending dropping 2% during the period which The Rank Group attributes to the lower than normal pay win margin in London. Digital revenues were up 19%, though the firm notes that the growth rate has slowed due to the competitive landscape.
Mecca saw like-for-like sales drop 7% as total brand revenue declined by 2% during the 15 week period, impacted by the unusually hot weather in the UK and an increasingly competitive digital bingo market, said the company. Despite an increase in digital spend per visit, digital revenues fell by 3%.
The Rank Group is the biggest faller on the FTSE 250 today, down 4.9% at 149.10 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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