Rank Group’s latest sales have fallen almost five per cent year-on-year as it took a hit from high rollers ditching its casinos, it said in a trading update today.
Takings at the company’s venues fell 6.1 per cent for the four weeks to mid-October, with its chain of Grosvenor Casinos seeing a drop in like-for-like revenue of 7.2 per cent as big spenders went elsewhere.
Meanwhile sales at its Mecca bingo halls fell five per cent as the brand failed to attract visitors.
While Rank’s digital revenue climbed 1.7 per cent – with Mecca’s digital sales up 6.4 per cent – more stringent customer due diligence rules hurt Grosvenor’s online offering, contributing to a 5.2 per cent decline.
However, Rank reported a whopping 46 per cent growth in like-for-like takings at its newly-acquired Spanish bingo house Yo Bingo. Yo Bingo, bought in May, helped total group digiatl revenue grow 13.5 per cent.
Even so, investors eased off on betting big on the company on the back of its trading update, with Rank Group’s share price falling over two per cent in early morning trading.
The company said a transformation programme has identified some cost savings for the full year, which it told shareholders would partly mitigate Grosvenor’s revenue shortfall.
But Nicholas Hyett, equity analyst at Hargreaves Lansdown, said cost savings and acquisitions wouldn't address Rank's longer term challenges.
"Rank’s real world venues suffered from lower footfall, perhaps not a surprise given the convenience of the online alternatives and relatively sub-prime locations that many occupy," he told City A.M.
"But Rank’s USP is it’s physical presence. Online it has lots of so-called 'digital native' competitors – it needs its physical casinos and bingo halls to set it apart from the crowd if it’s going to get a slice of the growing digital market.
"Additional checks for customers in Grosvenor’s online business are evidence of the increased scrutiny across the gaming industry. It’s an inevitable headwind which is unlikely to ease in the years ahead."