April 5, 2018 / 7:37 AM / 2 years ago

UPDATE 2-Rank sees profit decline as consumer spending squeezed

* FY op profit seen at 76 mln stg-78 mln vs 84.5 mln last yr

* Grosvenor comparable rev down 9 pct in 13 wks to April 1

* Mecca bingo revs down 2 pct

* Shares down more than 15 pct at lowest since Feb 2015 (Recasts, adds detail and background, updates shares)

By Rahul B

April 5 (Reuters) - Britain’s Rank Group warned that a weaker consumer outlook had hit the number of gamblers visiting its casinos and bingo halls, forcing it to forecast a lower full-year profit and knocking its shares to a more than three-year low.

Comparable revenues at Rank’s Grosvenor casinos and Mecca bingo venues were down 9 percent and 2 percent respectively in the 13 weeks to April 1, the group said on Thursday, blaming softer consumer confidence and two periods of cold weather.

High rollers at the Grosvenor chain had also splashed out less than expected. “Grosvenor Casinos’ underperformance has also been exacerbated by a negative contribution from its VIP players,” the group said.

Rank forecast operating profit of between 76 million pounds ($107 million) and 78 million for the year ending June 30, down from 84.5 million last year.

Shares in the company fell more than 15 percent to as low as 180 pence, their lowest since February 2015.

The fall in comparable revenue at the Grosvenor chain, which has 54 licensed casinos in Britain and two in Belgium, had steepened in recent weeks, down 9 percent in the 13 weeks to April 1 from a 1 percent drop reported in February.

Rank said it was cautious about the consumer outlook and did not expect conditions to improve, showing its industry is not immune to a softening in the wider economy in Britain.

The uncertainty around Britain’s planned exit from the European Union, coupled with rising inflation and stagnant real wage growth, has turned Britons more cautious on discretionary spending - a trend echoed by various retailers and documented by industry surveys.

Rank has been trying to increase its online operations to offset the slowdown at its halls and casinos and attract younger players who use mobile apps, with websites such as meccabingo.com and grosvenorcasinos.com.

As a results, UK digital revenue grew 17 percent in the 13-week period. Yet the downturn in its established venues adds to pressures on Rank, whose Chief Executive Henry Birch resigned in March to take over the top job at online retailer Shop Direct.

It said it was putting in place measures to improve Grosvenor’s performance over the medium to long term but gave not details.

In 2016 Rank tied up with online gaming firm 888 Holdings to bid for William Hill in a cash-and-stock deal to create Britain’s largest multi-channel gambling operator by revenue, but the proposal was spurned by the target. ($1 = 0.7112 pounds) (Reporting by Rahul B and Arathy S Nair in Bengaluru Editing by Sunil Nair and David Holmes)

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