Rank lowers profit guidance after posting net gaming revenue down from pre-pandemic 2019 in Q1

UK-based gambling company Rank Group has lowered its trading expectations by roughly 15%, now estimating earnings of around £47 million ($60.5 million) to £55 million ($70.8 million) for the year. The decision to slash estimates comes after the Mecca Bingo owner posted lower-than-expected financial results for the first quarter of 2022.

In a trading update shared on Thursday, the Grosvenor Casinos operator showed it has struggled to recover from the pandemic thus far, amid increased costs pressures and a fall in visitor numbers. Rank shares were down over 7% on Thursday afternoon.

Given the company’s UK venues (Grosvenor and Mecca) were closed for the entirety of the comparable period last year -while the Enracha venues in Spain were only for part of the quarter but under severe capacity restrictions- the most recent comparable is thus the three months to March 31, 2019.

Against that pre-pandemic comparative period, Grosvenor venues posted net gaming revenue down by 14% to £69.1 million ($88.9 million) and Mecca venues delivered NGR down by 25% to £34.1 million ($43.9 million). Both UK venue businesses were affected by a softness in visits at the end of the quarter, consistent with a rise in new Covid-19 cases across the UK.

Interior of one of Rank's Mecca Bingo venues

Meanwhile, Enracha venues’ performance saw a slight decrease in NGR, down just 2% to £8 million ($10.3 million) versus the comparable quarter in 2019. “Whilst the recovery is taking time, we believe that in the medium term there remains a strong path to recovery to the pre-Covid-19 levels” in all venues, the company said.

Rank’s digital business also posted a decrease in revenue. For the UK, digital NGR was down 1% year-on-year to £40 million ($51.5 million). While Grosvenor digital grew NGR by 3%, benefitting from omni-channel players from land-based venues, Mecca digital posted revenue down 11%, mostly attributed to the impact of a migration onto a new platform in January. International digital was down 5%.

The company describes the performance of its remaining digital brands as “mixed,” with a growth of 42% in other brands operating on the RIDE platform -the one to which Mecca migrated- partly offset by a revenue decline of 25% in the non-proprietary brands amid the introduction of affordability restrictions by other operators.

The company said it now enters a new quarter “at the start of a traditionally low season period” in its Grosvenor venues with visit numbers down. While Rank anticipates an improvement in performance post-April, it remains to be seen how the trends in the rate of return of office workers to city centers and overseas customers to London “will develop towards the summer.”

Considering trends for the quarter ended March 31, notably the softness in the UK venues towards the end of the period and continued inflationary costs, the business took the decision to lower its financial expectations, as commented before.

“The performance of our venues softened in March,” said John O’Reilly, CEO of Rank, admitting the trend has continued into the first few weeks of the current quarter, impacting the company’s current expectations for its full-year performance.

“We recognize 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,” he concluded.