Hard Rock eats into Rank earnings

POOR trading at the Hard Rock Cafe chain marred half-year profits at Rank. Operating profits at the chain dropped nearly 40% to £14.8m as high spending tourists stayed away.

Like-for-like sales at Hard Rock Cafe, one of four businesses left in the group after chief executive Mike Smith finished his restructuring, were down 6.3% in the first half. Lower sales of branded merchandise was mostly to blame and Smith said recent trading suggested traffic was beginning to trickle back, with food sales up 1.6% in the last nine weeks.

He plans to roll out the Hard Rock brand as a casino chain. The first one opened in Manchester in July with a second due in November in London on the site of the former Fashion Cafe near Leicester Square.

Operating profits at the Deluxe video business were up 38%, while gaming profits were 15% better. But the Hard Rock factor meant pre-tax profits were 11% lower at £79.4m for the six months ended 30 June, on sales of £680.9m.

Smith, who failed with his bid for the Coral bookmaking chain last month, ruled out a return of cash to shareholders. 'We don't consider we have a surplus of cash. Interest is covered five times and we are investing in organic growth.'