Rank Group shares slip by 9% despite modest revenue growth in Q1 of 2022/23
Shares in the Rank Group slipped by more than 9% today (13 October) despite the operator announcing net gaming revenue growth of around 2% in the first quarter of its 2022/23 financial year (three months ended 30 September 2022).
The modest growth, which brought the firm’s overall NGR to £165.7m, was recorded following a 13% increase in digital revenue to £48.9m, while the company’s largest segment – its UK land-based Grosvenor Casino venues – saw revenue dip 5% to £75.3m.Mecca Bingo venues in the UK fared slightly better, registering a 2% revenue increase to £33.3m while Rank’s Enracha land-based venues in Spain saw revenue grow 24% to £8.2m.
The dip in Grosvenor’s land-based revenue came in spite of an increase in visitor numbers, as the average spend per visit decreased across the group’s nationwide chain of casinos.
In London, revenue from Grosvenor venues actually grew by 21% as the casinos saw a 20% increase in the number of customer visits, but this growth was more than offset by a 17% revenue decline in venues outside London where customer spend levels were weaker.
Average weekly NGR for the Grosvenor brand was £5.7m, down 5% on the prior-year comparative period but up 12% against the previous quarter.
The firm’s digital brands helped mitigate some of the revenue reductions seen in the land-based sector, as the online Grosvenor brand performed well with 25% revenue growth, following its migration onto Rank’s proprietary RIDE platform in September.
Mecca digital remained relatively flat with revenue up just 1%, while Rank’s Spanish online operations grew by 12%.
Rank Group CEO John O’Reilly: “It is pleasing to see increasing visits in this new financial year together with strong growth in the digital business, where we are starting to see the benefits of investments in our proprietary technology platform and our cross-channel offering, with encouraging growth in both the UK and Spain.”
Rank said that consumer discretionary expenditure “is expected to remain under significant pressure this year,” as inflation remains high.
It added however that the recently announced Energy Bill Relief Scheme is welcomed by the group and, following its implementation, Rank expects energy costs in the current financial year to total around £34m, up from £23m in FY22.Other inflationary pressures continue to present a challenge to the business, it said, particularly in the land-based sector as wage inflation, food price increases and supply chain pressures all continue to push up costs.
“It is pleasing to see increasing visits in this new financial year together with strong growth in the digital business, where we are starting to see the benefits of investments in our proprietary technology platform and our cross-channel offering, with encouraging growth in both the UK and Spain,” said Rank Group CEO John O’Reilly.
“The group has a number of key initiatives underway to improve long term revenues. These include some key refurbishment projects and new electronic roulette and jackpot games in Grosvenor; improving the gaming machine offering in Mecca; increased personalisation and a stronger live casino offering in the UK digital business and the recent launch of Yo Sports in Spain.
“The Group has the benefit of a strong balance sheet, enabling us to continue investing in the business through this period,” O’Reilly concluded.