Rank plots the long road to recovery as revenue drops despite digital gains

Rank Group has expressed encouragement at the first few weeks of trading since reopening, however, the group acknowledged that any full recovery could take some time.

During July and August Rank has reopened 72 of 77 Mecca venues, which it says are achieving 70 per cent of prior year revenue with visit numbers now typically at 55 per cent.

Grosvenor casinos, which were only permitted to reopen throughout England on August 15, sees venues outside of London reported to be achieving 75 per cent of prior year revenue levels and consequently are cash positive. Weak trading in London sees revenue sit at around 40 per cent of prior year levels.

Driven by the groups transformational programme, Rank states that it “entered lockdown with significant momentum to revenues and profits” as well as a tightly controlled cost base and a strong balance sheet.

Group underlying net revenue for the year ending June 30, 2020, closed at $585.1m, a 15 per cent drop from £685.1m. Underlying digital NGR rose 23 per cent to £145.3m (2019: £118.5m), with underlying venue NGR dropping 22 per cent to £439.8m (2019: £566.6m). Underlying operating profit decreased 32 per cent from £75.7m to £51.1m.

Rank’s statutory performance saw reported NGR close at an eight per cent decline from £695.1m to £638.1m, impacted by the closure of the group’s venues, which represent 76 per cent of its LFL revenues. Group operating profit nosedived 40 per cent to £23.5m (2019: £39m).

As digital NGR soared 23 per cent to £145.3m (2019: £118.5m), Grosvenor venues dropped 18 per cent to £275.9m (2019: £338m), Mecca decreased 30 per cent to £128.4m (2019: £183.7m) and international facilities finished up at £35.5m, a 21 per cent decline from £44.9m.

John O’Reilly, chief executive of The Rank Group, explained: “With positive momentum from the transformation programme, Rank performed very strongly during the first part of the year and into the second half. Despite continued good growth in our digital brands, with our venues closed from mid-March, the impact of the COVID-19 pandemic on the group has been significant. 

“However, with the huge commitment and dedication of our colleagues, very tight cost control across the business and the support we have received from Government, we have carefully navigated the past few months and are now beginning to successfully emerge. We know the recovery will take time, but the underlying strength of our business provides us with confidence that we are well equipped to return to full strength. 

“We’ve been encouraged by the first few weeks of trading following reopening and whilst the supply-side constraints, including social distancing and changes to the way we operate table gaming, are going to be challenging over the coming months, the response from customers to the extensive safety measures we have in place has been very positive. 

“The need to deliver on Rank’s long-standing promise to excite and to entertain our customers has never been more important. The post-lockdown expectations of customers who are looking for ways to safely enjoy their leisure time and spend will be higher than ever, and we are determined to ensure our brands are well-positioned to benefit from this shift.

“Our venues, in particular, are ultra-safe and invariably benefit from being large in size. This gives us extra opportunities to offer something special to our casino and bingo customers within a COVID-19 safe environment and we are looking forward to welcoming more of our customers back.”   

Rank expects to rebuild revenues through the year, with an increase in footfall expected once social distancing and other supply constraints reduce and customer confidence returns.