Merchandise slump still hurting Hard Rock

Poor merchandise sales are continuing to knock turnover and profits at Hard Rock Café, owner Rank said today.

The company said like-for-like sales in the 22 weeks to 26 November had followed the trends seen in the first six months of its financial year.

While food and drink sales had remained positive, up by 2.2%, merchandise sales had tumbled by 4.5%.

Overall like-for-like sales for the year to date were still ahead, but only just, up by 0.6%.

One chink of light was that a crackdown on costs had improved operating margins in its owned cafes, Rank said.

Recent openings in the USA had been trading ahead of expectations and since the end of the half-year period franchised cafes had opened in Athens, Kuwait City and Hurghada in Egypt.

A café in Gothenburg was expected to open this month, Rank added.

"Hard Rock's operating profits are now benefiting from the expansion of the brand into casinos and hotels," it said in the trading update.

"The two Seminole hotels and casinos in Florida are performing in line with expectations and the hotels in Chicago and New York have also contributed to the results during the period," it added.

Plans for a Hard Rock Hotel in Madrid would take the total number of developments within its joint venture with Sol Melia to four, and the total of hotels and casinos bearing the Hard Rock brand to 13.

Rank's plans to demerge its gambling, hotel and restaurant business from its film and media operations were continuing, and there would be an update at its full-year results in February, the company said.

by Nic Paton

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