Friday 18 September 1998
If there was ever the slightest doubt that Rank seriously overpaid for the Uncle Tom Cobleigh pubs chain, the Bass profits warning has laid it to rest. Uncle Tom Cobleigh is heavily weighted to precisely the same areas of the country Bass identified as being most hit by what it called "a general softening of consumer demand".
Presumably that same softening, added to the dreadful summer weather, will be hitting Rank's plethora of other businesses too, from Butlins and Mecca to Odeon cinemas and Hard Rock cafes. If this were an engineering company, then the underperformance of the company's business and share price would be understandable, but Rank is in what is meant to be a growth industry, leisure.
Mr Teare, a relaxed and jovial man, is in the habit of saying that life's too short to lose sleep over such matters, but surely even he must now be feeling the heat, even if his businesses are not. He's judged to have done the right thing in getting out of Rank Xerox, but the Uncle Tom Cobleigh acquisition only seemed to add to the group's perceived weakness as a rag bag of unconnected leisure interests.
Though Mr Teare has been investing heavily in his core brands, he seems to have failed to stamp a cohesive strategy and culture on the group. Much of the problem is not down to Mr Teare as such, for he inherited a rotten situation. The City never knew the half of it, and a large part of Mr Teare's job since has been to disillusion investors.
The City is nonetheless an unforgiving place and the wolves are already at his door. Mr Teare needs to find a way of restoring value to shareholders in double quick time, or, to use the time honoured expression, he'll find someone else doing it for him. Radical action is called for. Breakup and demerger must be put firmly back at the top of the agenda.
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