Stanley Leisure issues surprise profits warning

Stanley Leisure lost a fortune on the horses yesterday – when the value of the betting shops and casinos group fell £110m, or 24 per cent, on news of a run of bad luck.

A string of favourites, such as Best Mate in the Cheltenham Gold Cup, have romped home leaving bookies out of pocket and leaving Stanley's annual profits shy of market forecasts. The group also suffered because many of its customers in Ireland and Northern Ireland placed big bets on Monty's Pass, the Irish winner of the Grand National.

Bob Wiper, the chief executive, said there had also been disappointing results from the group's 400 regional casinos, and he had cut dozens of jobs among the division's 6,400-strong staff as a result.

Jobs will go on the gaming floors and also in the food and drink outlets, which Stanley has been expanding in anticipation of deregulation of the casino industry.

Mr Wiper said he believed the phenomenon of lower gaming interest outside of London was an industry-wide phenomenon, perhaps related to "the general mood of uncertainty" in the past few months. "Taken together, additional costs associated with the investment in the estate and weak demand will lead to profits broadly in line with last year," he said.

The profits warning shocked the market, coming after a month when Stanley's shares have jumped by almost a fifth. They fell 88p to 279.5p yesterday. Only in January, the group had said that the division was growing strongly, and at the halfway stage of the financial year its profits were 50 per cent up on the previous year.

Stanley's final results will be reported in July, and analysts yesterday shaved about 15 per cent from their profit forecasts. They now expect £40m to £41m before tax and goodwill, a 20 per cent improvement on the last financial year.

Andrew Burnett, a leisure analyst at Merrill Lynch, was among those cutting his numbers. He said that Stanley may be losing market share to Rank Group, which is expanding. "Trading in provincial casinos has been flat since the beginning of the calendar year for the casino industry as a whole. It looks as if Stanley has been underperforming against this trend, with the company experiencing negative year-on-year growth in both drop and win."