Rank shares tumble 15% to three-year low after profits warning

A winning streak among high-stakes gamblers at its casinos and empty seats in its bingo halls have hit profits at the leisure group Rank.

Its shares tumbled 15% to a three-year low after the company said annual profits would come in at around £77m rather than the £83m forecast by City analysts.

Rank blamed much of the profits fall on the squeeze on consumer spending, with its board expecting tough trading conditions to continue into 2019.

Underlying sales in its Mecca bingo halls declined by 2% in the 13 weeks to 1 April as bingo fans stayed home during the recent snows. The situation was worse at its Grosvenor Casino chain, with where sales down 9% as weaker than expected visitor numbers were compounded by the run of good luck among high-rollers.

“The board is cautious about the UK consumer outlook and as a result expects venues to continue to be impacted for the remainder of the 2017-18 financial year and into 2018-19,” said Rank.

The uncertainty created by the Brexit negotiations, coupled with rising inflation and stagnant real wage growth, has eroded consumer confidence with a string of high street retailers and mid-market restaurants reporting weak sales.

The downturn comes at a difficult time for Rank, which last month announced that Henry Birch, the chief executive, was leaving to run the online retailer Shop Direct.

To offset the slowdown at its halls and casinos, Rank has expanded its online operation with websites such as meccabingo.com and grosvenorcasinos.com to attract younger people who use mobile apps. This was the one area in which Rank has performed strongly, with digital sales up 17% in the 13-week period.

As part of its fightback Rank has also launched a high street bingo chain called Luda, which with a coffee shop and bar, is aimed at a younger audience. It has opened three venues to date, but the results have sop far been mixed, the company said.

Rank’s shares closed at 180p on Thursday, their lowest since February 2015.

The decline of retail gambling has triggered a wave of consolidation in the sector. In February Ladbrokes Coral was bought by GVC, the Isle of Man-based firm behind Foxy Bingo, in a deal worth up to £3.9bn. In 2016 Rank tied up with online gaming firm 888 Holdings to bid for William Hill but the proposal was rejected.