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Casino operator Rank sets turnaround plan after profit, revenue drop

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(Reuters) – Rank Group <RNK.L> unveiled a turnaround plan on Thursday to boost revenue and cut costs after its full-year pre-tax profit fell more than 40 percent, as traffic dropped at its casinos and bingo halls, and its online business saw lower demand.

The company warned that trading for the current year was a bit challenging as the six-week period to Aug. 12 was hit by unusually warm weather. But Rank expects annual results to be in line with the current market expectations.

Rank is putting more focus on its digital business in the attempt to bolster profits and revenue and named Jim Marsh, previously a partner in McKinsey & Co’s transformation team, to the role of chief transformation officer.

Operating profit at Rank’s digital business, which runs websites such as meccabingo.com and grosvenorcasinos.com, fell 7.9 percent to 20.9 million pounds, hurt by higher employment costs and taxes following a change in taxation of free bets that started October 2017.

The company said UK digital business growth slowed down in the second half, with customer visits dropping after the UK Gambling Commission announced tighter regulation on money laundering and stricter customer identification last year.

Rank has been trying to boost its online operations for some time now to attract younger players and offset the slowdown at its halls and casinos.

The company had issued a profit warning in April amid tepid consumer spending with Britons tightening their purse strings.

Low win margins and unusual weather hurt the company’s Grosvenor casinos, the UK’s largest multi-channel casino operator by venue, with their revenue declining more than 6 percent for the year ended June 30.

Total revenue fell 2.2 percent to 691 million pounds.

Full-year operating profit before exceptional items fell nearly 8 percent to 77 million pounds, in line with the company’s revised estimate of profit between 76 million pounds and 78 million pounds.

(Reporting by Sangameswaran S in Bengaluru; Editing by Amrutha Gayathri)

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