Andrew Teare stepped down after a gloomy trading statement showed a 20% fall in profits to £111m ($186.4m) in the three months to September 26, the key trading period for the company.

Shares surge

His departure prompted a rally in the leisure company's shares.

Investors reacted with relief to the news of Mr Teare's resignation, leading to a 7% rally in the group's shares which stood at 241.5p around mid-morning.

The stock was removed from the FTSE 100 index of leading British companies last month when it more than halved in value from a peak of 550 pence in April 1995 to below 200p.

Butlins blunder

Mr Teare's resignation brings to an end a troubled two-year tenure.

One of his key strategies was a £139m redevelopment for its Butlins holiday camps.

But analysts said the timing was disastrous as it coincided with a wet summer, the World Cup and the strong pound, which drove people away from holidays in the UK.

Higher levels of gambling tax and the economic downturn also impacted significantly on its gaming operations during the third quarter, it said.

Video duplication of Titanic dented profits

At its Deluxe video duplication division, turnover increased as the smash hit film Titanic was processed. It is the biggest order ever received for one title.

But the order was so big and the deadlines so tight that the group was forced to subcontract some of the production work, again hitting profits.

Rank Chairman Denys Henderson said the board believed "an even more determined approach to drive the business forward is required and that this is the time for a new leadership."

Rank Commercial Director Douglas Yates will serve as acting chief executive while the company seeks a new leader.