Mecca bingo owner Rank has seen shares plummet after it warned over profits for the second time in three months due to soaring costs and a slower-than-expected recovery in its casino arm.
Shares tumbled by nearly a fifth on Monday morning as the group said it had seen some recovery in the Grosvenor casino business since April – when it also cut its earnings forecast – but that it had been “considerably” weaker than expected.
Rank added that it is not seeing a significant return of high-spending overseas customers to its London casinos as tourist numbers have yet to fully bounce back.
The company had hoped that a return of tourist trade this summer would re-energise its casino recovery.
It also blamed the hit to earnings on rocketing inflation amid the cost-of-living crisis.
Rank said: “As a result of the recent performance in Grosvenor venues and continued inflationary cost pressures across the group, subject to normal casino win margins between now and the year end, we expect like-for-like underlying operating profit to be approximately £40 million for the year ending 30 June 2022.”
It had already cut its earnings forecast in April to between £47 million and £55 million, having previously guided for between £55 million and £65 million.
Analyst Greg Johnson, at Shore Capital, said the “crux will be a return in higher-spending international customers over the summer, and we now see a pick-up from July”.
He cut his forecast for Rank’s profits for the next financial year as well, by £8 million to £62 million, but added: “We would expect a clearer picture of the trading backdrop and potential rebound in international travel at its preliminary results on August 18.”