Slump in Rank's profits adds to pressures on Teare

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The Independent Online
City analysts said yesterday that Andrew Teare, the chief executive of Rank, was living on borrowed time after the troubled leisure group announced disappointing results.

Rank was the biggest blue-chip faller on a day that the FTSE 100 index raced away, slumping 30.5p to 340p. Since Mr Teare took over as chief executive last year, Rank's shares have under performed the FTSE 100 index by almost 50 per cent.

The poor figures overshadowed Rank's decision to spend more than pounds 310m buying back up to 10 per cent of its own shares over the next few weeks.

Mr Teare said yesterday; "We have embarked on a very big fundamental overhaul of Rank. Of course, I am disappointed we have not got more to show for its today. But it always takes longer than the market wants. There is a lot happening in the engine room and I am confident it will come through."

Rank plans to form a worldwide chain of Hard Rock Cafe hotels, with Singaporean hotel entrepreneur Ong Beng Seng, based on the popular restaurant chain. Rank has already launched a Hard Rock TV channel and record label.

Mr Teare is also looking to open a new themed restaurant chain to go alongside the Hard Rock Cafe. Other plans include a chain of US casinos and the group has recently applied for a US gaming licence. Rank is due to announce a big shape up of its Butlin's holiday camps next month. Analysts expect at least two of the five Butlin's sites will be completely rebuilt and renamed in an attempt to revitalise the flagging brand.

But observers remained sceptical about Mr Teare's reforms. "Whenever Rank produces an announcement these days, the share price falls. Mr Teare will have to start coming up with the goods or he is likely to go," one analyst said yesterday.

Rank plans a rapid expansion of Tom Cobleigh, its themed pub chain. But a delay in openings saw Tom Cobleigh's first-half profits fall well short of expectations, adding fuel to criticisms that Rank paid over the odds for the business.

Rank's pre-tax profits fell to pounds 85m (pounds 144m) for the six months to June due to a fall in video sales following a lack of big film releases.

The group is raising more than pounds 100m by selling its property portfolio to British Land, the UK's second largest property group. The money will be used to part fund the share buy-back. The group would consider further share buy-backs next year.