Rank profits tumble by two-thirds after retail shutdown
UK gambling operator Rank Group’s after-tax profit fell by two-thirds in its most recent fiscal year as COVID-19 took a big bite out of its retail operations.
Figures released Thursday show Rank generated revenue of £638.1m in the 12 months ending June 30, down a modest 8% from fiscal 2018/19. But operating profit slid 40% to £23.5m and after-tax profit tumbled 66% to just £9.4m.
Rank was keen to point out that things had been going gangbusters in the eight months ending February 29, but then again, I was right close to getting Kendall Jenner to marry me until she failed to respond to my Insta post.
Back in the real world, Rank’s digital operations helped shore up the pandemic-mothballed retail venues. Like-for-like digital revenue – which excludes contributions from Rank’s October acquisition of Stride Gaming – was up 23% to £145.3m while operating profit gained 13% to £27m.
Mecca Digital revenue was up 23% to £76.5m, while Grosvenor’s online revenue rose 24% to £52.4m. But average revenue per user was down across both brands as the company added “lower-spending” customers and tightened responsible gambling controls.
Counting Stride’s £51m contribution, digital revenue shot up 66% to £196.2m. For the full year, counting Stride’s activity pre-acquisition, the brand’s revenue actually dipped 9% to £67.1m. Rank blamed the downturn on improved social responsibility measures for vulnerable customers, which added “inevitable friction” for all Stride players.
Friction goes both ways. Counting Stride, Rank’s overall digital operating profit fell 12% to £17.8m thanks to £9.6m in amortization expenses related to Stride’s “acquired intangibles.”
The Spanish-facing Yo online bingo brand reported revenue up 18% to £15.4m after adding an online casino offering last December. Yo is preparing to launch online bingo operations in Portugal in the second half of the current fiscal year.
The Spanish-facing Enracha brand remains a minnow with revenue of just £1m, around £100k higher than last year. Last week, Enracha.es site received permission to add a sportsbook to its product mix courtesy of Rank’s long-time supplier Kambi Group.
Total retail revenue was down 22% to £439.8m, with declines across the board at Grosvenor (£275.9, -18%), Mecca (£128.4m, -30%) and international venues (£35.5m, -21%). Retail operating profit was down 40% to £23.5m, with Mecca taking the biggest hit, tumbling 89% to just £3.2m.
International venues began to reopen in June and Rank said customer confidence was slowly increasing, with the exception of the city centers in Madrid and Barcelona. In the UK, 51 Mecca venues reopened in July, while another 21 joined the party in August, leaving only five “marginal clubs” whose doors remain shut due to landlord disputes.
The Grosvenor casinos weren’t cleared to reopen until mid-August and many didn’t open until the end of the month. Venues in Bolton and Leicester have yet to reopen, while the Sunderland venue is undergoing a review of its “viability under social distancing measures.”
Rank CEO John O’Reilly said the company was “beginning to successfully emerge” from its pandemic haze, and the venues business is currently trading around 70-75% of its pre-pandemic levels. Assuming it doesn’t start raining frogs, Rank expects “to be at cash breakeven or above in September before the impact of repaying deferred duty and rent.”
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