Rank enjoys strong Christmas, leaves guidance unchanged

Rank Group left its full-year guidance unchanged on Thursday, despite seeing an uplift in trading over Christmas and the New Year.

The gambling group, which owns Mecca bingo and Grosvenor Casinos in the UK and Enracha in Spain, reported underlying like-for-like net gaming revenues of £337.4m in the six months to 31 December, a 2% increase year-on-year.

Within that, digital NGR sparked 9% to £100.8m, but venues NGR eased 1% to £236.6m.

The group was hit hard by the pandemic, with successive lockdowns closing its venues for long periods, and recovery has been slow, especially in its casino estate. Underlying NGR at Grosvenor fell 5% year-on-year, although that was a 15% improvement on the last six months of the 2022 financial year.

Rank said Christmas and New Year trading had been strong, especially at Grosvenor, and momentum had continued into the first three weeks of January.

But it left its 2023 guidance unchanged, noting: "While we have experienced a good start to the second half, in light of the challenging macroeconomic environment we are maintaining our underlying like-for-like operating profit guidance range of between £10m and £20m for the full year."

John O’Reilly, chief executive, said: "The recovery from the severe impact of the pandemic on our UK venues businesses has certainly been slower than we anticipated. Since lockdown we have faced a huge increase in energy costs, high wage inflation, the slow return of overseas visitors to London and the increasing pressure on consumer’s discretionary income.

"However, trading is improving as we invest in the quality of our products and properties."

Underlying operating profits tumbled to £4.2m from £24.9m, hit by £15m of higher energy prices and wage inflation.

Greg Johnson, analyst at Shore Capital, said: "Although the trading backdrop remains challenging and the profit performance disappointing, we continue to believe that the current valuation fails to reflect the potential recovery in the UK casino estate, especially London, the opportunity to build a meaningful digital business and the upcoming gambling review, with the prospect of more slots."

Shore has a ‘buy’ recommendation on the stock, which was largely flat at 90.5p as at 0945 GMT.