Penn National is working hard at increasing its profits. According to Vital Vegas founder Scott Roeben, the casino operator has possibly devised its own version of the “MGM 2020” cost-cutting plan as it seeks to improve its bottom line. In an interview with Las Vegas CBS affiliate KLAS-TV, Roeben explains that Penn is looking for ways to increase its margins through employment and operational reductions.
Roeben stated in the interview, “They (Penn) are laying people off very strategically. They are consolidating. Their goal is to really cut costs and become more profitable and it makes perfect sense. They have already slashed the social media teams across the country.”
As opposed to the MGM plan, which has already seen more than 1,000 people lose their jobs, Penn is taking a more methodical approach and is exploring a wider range of options. However, as is always the case when companies want to save money, personnel have already had to be let go. Most notably, as Roeben points out, Penn has been virtually nonexistent in the social media space, which runs contrary to what is typically seen by gaming companies. It hasn’t had an official Twitter account since 2015 and some of its individual properties are also taking a step back from social media platforms.
Penn’s version of the plan is reportedly called Project 30, although there is no official confirmation of the name or the plan. It actually predates MGM’s plan and was first introduced in 2016. That year, the company released a presentation to reach just over 27% in its 2017 EBITDA (earnings before interest, taxes, depreciation and amortization) margin. The ultimately goal has been to improve the margin to 29%-30% by next year.
Changes are needed within the company, especially based on its most recent performance. Its stock price has been dropping, now down almost 49%, thanks to weaker sales at the company. Penn isn’t the only operator to suffer, though, as all have seen revenue declines.
However, it is still performing worse than virtually all of its competitors. Red Rock Resorts has a market cap of $2.7 billion and Boyd has a market cap of $3 billion, but Penn is lowest among these three with $2.2 billion. In the domestic casino stock market, only two are performing worse than Boyd, Empire Resorts and Golden Entertainment.