Investment: Teare needs a miracle to make Rank work

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The Independent Online
Investment: Teare needs a miracle to make Rank work

SO THE CLOCK is ticking for Andrew Teare. Institutional investors have given the embattled chief executive of Rank, the Butlins-to-bingo leisure group, another six months in which to prove that his strategy is working. And on the evidence of yesterday's first-half figures, he needs something approaching a miracle to survive.

This is a tad harsh on Mr Teare, who has done what he could with Rank's portfolio of mature businesses. But at the moment, the City is not giving him much hope. Analysts were yesterday busily downgrading forecasts after what they saw as a disappointing set of interim results.

It was hard to find a part of Rank that really sparkled. Worst hit was the holidays division, which suffered from grim weather and the closure of several Butlins sites for refurbishment. Trading in the cinemas and nightclubs, meanwhile, was hit by the World Cup.

Hard Rock's 15 per cent jump in operating profits was entirely down to new venues and brand extensions like beer and records: like-for-like sales in the restaurants fell 6 per cent.

The only ray of light was the Deluxe video copying and film processing unit, where profits jumped 45 per cent.

With the second half looking little brighter - holiday bookings are down 3.5 per cent so far - and an economic slowdown on the horizon, Rank looks less likely than ever to achieve the required 15 per cent return on the investments Mr Teare has made.

Analysts now forecast full-year profits of around pounds 300m, putting the shares, which fell 19p to 309p yesterday, on a forward p/e multiple of around 11. Although the shares probably won't fall much further, it's hard to see any prospect of recovery. However, with the possibility of US venture capital groups ending the sorry tale with a hostile bid, existing shareholders should sit tight.

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