Casino and bingo operator Rank (RNK) has revealed a profit warning as weaker consumer confidence and cold weather kept visitors away.
The bad news triggered a sell-off with the shares plummeting 14.4% to 182.7p.
The company says operating profit in the year to 30 June 2018 will now be between £76m and £78m.
The impact of its weaker trading is expected to continue into the next financial year.
HOW BAD IS THE PROFIT WARNING?
Broker Peel Hunt analyst Ivor Jones has reduced his earnings before interest and tax (EBIT) forecast by 6% to £77m and cut EBIT expectations by 3% to £81m in 2019.
Earnings per share forecasts have also been hit and are anticipated to fall 7% to 14.9p and by 3% to 15.9p in 2019.
Both of Rank’s UK venues businesses have been impacted by lower visitor numbers, which was made worse by severe snowy weather caused by ‘The Beast from the East’ and ‘Storm Emma.’
In the 13 weeks to 1 April, like-for-like sales have dropped 2% and sales from bingo club chain Mecca declined 2%.
The UK’s biggest casino brand, Grosvenor Casinos, suffered a 9% fall in revenues following a ‘negative contribution’ from its VIP players. UK digital revenue growth was the only real bright spot, at 17%.
CAN ONLINE GAMBLING COME TO THE RESCUE?
Jones is optimistic about Rank’s outlook thanks to strong growth in online gambling.
In March, chief executive Henry Birch handed in his resignation to join multi-brand online retailer Shop Direct.
‘While the timing may purely be a coincidence, with Birch leaving to run Shop Direct, you cannot help wondering if he jumped before the ship sank,’ says AJ Bell investment director Russ Mould.
Mould flags this is not the first time Rank has run into trouble as earnings were hit by tights controls on money laundering and problem gamblers, as well as weakness in its bingo division last year.
