Rank shares plunge after sales slump

Shares in the gaming group Rank plummeted to 15-year lows yesterday after it revealed that the English smoking ban and recent changes to UK gambling laws had hit sales at its Mecca Bingo chain harder than expected.

The stock closed the day down more than 21 per cent at 125p, its biggest one-day fall.

Although overall like-for-like group sales, for the 40 weeks to 7 October, were up 2 per cent, like-for-likes at Mecca were down 2 per cent, while total revenues at the bingo halls were down 5 per cent. Investors were most concerned, however, by the news that trading conditions have been much weaker in recent weeks.

Like-for-like revenues at Mecca were down 19 per cent during the five weeks after new laws forced it to remove a range of its high-jackpot gaming terminals, while admissions were down 13 per cent. Revenues in England and Wales were down some 22 per cent in the bingo halls, and down 6 per cent in Scotland, where the smoking ban was introduced last year.

The smoking ban also took its toll on its Grosvenor Casino chain, which it said had seen a 9 per cent fall in revenue over the past five weeks.

The company said the outlook for future trading conditions was uncertain. "The coincidence of a number of external factors has resulted in a period of volatility and a lack of visibility unprecedented in the UK gaming industry. Should the disappointing levels of recent weeks' trading continue through to the end of the year (and given the relatively high level of fixed costs within Mecca Bingo and Grosvenor Casinos), group operating profit for the full year would be significantly lower than in 2006."

The company's Spanish bingo clubs and its interactive gaming business, Blue Square, were the only divisions to have performed well over the past few weeks. Total revenues in the Spanish operation were up 8 per cent over the first nine months of the year, while sales at Blue Square were up 38 per cent.