Rank needs a big idea

Andrew Teare looked more relaxed yesterday than at any time since he took on the Herculean challenge of sorting out Britain's largest, least focused and dullest leisure company. His honeymoon period at Rank looked dangerously like ending in divorce unless he could reverse the share price slide that started more or less on the day he moved into the hot seat. Yesterday, for the first time, the market began to believe he was up to the job.

During the reign of Mr Teare's predecessor, Michael Gifford, Rank adopted the Millwall FC approach to investor relations - "no one likes us and we don't care" - so yesterday's attempt to convince the City it was setting itself demanding but achievable return on capital targets was a positive first step towards dispelling worries, underscored by last year's expensive Tom Cobleigh acquisition, that Rank's best talent was for squandering shareholders' funds.

The PR offensive has a long way to go yet, however. Analysts still find Rank's level of disclosure unacceptably low. It suggests problems where they may not exist. When the share price has fallen a quarter in a year while the rest of the market has risen 16 per cent, these doubts need to be addressed head-on, not sidestepped.

Presentation aside, the substance of Rank's problems remains intractable. It owns a rag-bag of tired brands like Butlin's that will require heavy capital investment to bring up to date, some mature concepts like Hard Rock, which is struggling even to maintain like-for-like sales let alone grow them, and hard-pressed businesses like Mecca bingo, which is outperforming its peers but still earning less than it did before the National Lottery spoiled the party two years ago.

Getting shot of its pounds 1bn Rank Xerox stake will underpin a balance sheet that is starting to look stretched now a pounds 300m disposal programme is largely complete, but what now? For a company operating in strong growth markets, an inability to find anything sizeable to invest in is some indictment. Mr Teare has come through a sticky first year as well as he could have expected in a business he knew next to nothing about. What he, and Rank, needs more than anything now is a big idea.

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