WH Smith buoyed by travel business but high street chain under pressure: reaction
The group said it is looking to strip out more costs in the high street arm, with “significant” savings earmarked, “most notably through reductions in rent”. Many of the stores also house branches of the Post Office.
WH Smith’s full-year trading update showed that sales across its high street division over the second half fell to 80 per cent of 2019 pre-Covid levels, down from 86 per cent in the first six months.
But a rebound in its travel division, covering airports and railway stations, helped overall group sales remain “comfortably” ahead of pre-pandemic levels.
The chain said that, despite some ongoing disruption, the bounceback in the global travel market has boosted its sites across airports and railway stations, with travel store sales over its second half at 129 per cent of levels seen in 2019.
In the most recent 11 weeks to 27 August, sales were 135 per cent compared with three years ago.
In April, the group’s Funky Pigeon online greeting cards business was forced to stop taking orders after being hacked. It said at the time that “no customer payment data” was at risk and that it did not believe any customers’ account passwords had been affected, but it took its systems offline “as a precaution”.
Thanks to the travel performance, 230-year-old WH Smith said overall group sales ended the second half at 112 per cent of 2019 revenues, with the most recent 11 weeks at 117 per cent of 2019 levels.
The travel division encompasses more than 580 stores in airports, hospitals, railway stations and motorway service areas, while there are around 560 sites in the high street business.
WH Smith kept its full-year guidance unchanged, having raised its outlook in June after the reopening of travel markets drove sales beyond pre-pandemic levels for the first time since the heavy toll of coronavirus. It has been buoyed by expansion in the travel sector, having purchased US-based airport technology retailer InMotion in 2018.
The group added that it is due to expand further across the travel retail sector.
Julie Palmer, a partner at Begbies Traynor, said: “WH Smith took a hammering in the pandemic as its travel stores - especially those in airports - were left empty as public transport was deserted and flights were grounded.
“The retailer’s travel operations have since bounced back to above pre-Covid levels as consumers finally got the chance to jet off on much-needed holidays, and stocked up on treats in departure lounges.
“One key question for WH Smith is how its high street stores survive. Beyond its newspapers, magazines and books, the chain is notoriously expensive for other items and fighting against discounters who are often on the same street.”
Victoria Scholar, head of investment at Interactive Investor, added: “ Investors have had a difficult ride with the stock over the last 18 months. But over the last six months, shares have caught a bid, with the potential for further upward momentum if sales continue to perform well.”
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