WH Smith hospital stores overtake rail station sites

Patients and visitors are heading to WH Smith’s hospital stores in record numbers, making them more popular than the newsagent’s train station sites, the company has revealed.

Hospital stores now the second largest division in travel arm after airports. Picture: Contributed
Hospital stores now the second largest division in travel arm after airports. Picture: Contributed

Bosses said hospital stores are now the second largest division in its travel business – after airports – and are helping to keep profits in line with expectations.

In its high street division, the retailer also revealed that strong sales of high-margin stationery have helped, with the firm planning to roll out more ranges and offer up more shop floor space to the pens and pads.

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The company also highlighted the strength of its Post Office business, with 202 WH Smith stores now hosting them.

Internationally, the company said its new US travel accessory business – InMotion – continues to grow strongly with 428 stores open outside the UK.

WH Smith bought InMotion last year for £155 million, marking its first foray into the US accessory market. The deal dragged down half-year profits 21 per cent to £65m in the six months to the end of February – a figure revealed in April – including a £9m hit from the purchase.

But bosses remain confident, pointing out that the firm now has three InMotion stores outside North America: In Perth, Australia; Alicante, Spain; and Leeds Bradford Airport in the UK.

The group added: “We see further opportunities to grow our news, books and convenience format in the international travel retail market, where we have a small market share.”

In hospitals, WHSmith has had a rocky relationship with customers and the public over its stores in the past. Research in previous years revealed the same products were more expensive in WH Smith hospital stores compared with the same sites on high streets. It led to the chain bowing to public pressure and cutting prices in hospitals after criticism from politicians that it was targeting the most vulnerable with higher prices.

More recently, it was in trouble after a visitor spotted it was charging £7.99 for a tube of toothpaste that cost less than £1 elsewhere. Bosses said the issue was a pricing error and would be rectified.

The latest trading update comes ahead of the company’s full-year results, for the year to the end of August, which are due out in October.

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John Moore, senior investment manager at Brewin Dolphin, said: “WH Smith is a rare retail success story against the turmoil of the high street, which is a credit to its management team.

“It’s a business of two halves: the continuing growth of its travel operations, which includes outlets at hospitals, and the managed decline of its more traditional high street shops. Combined, its parts have proved to be resilient, with cashflow from the latter funding growth in the former.

“The net result is that the company has delivered meaningful returns to shareholders, and the shares have subsequently more than tripled in value over the past decade.

He added: “The inevitable question is how long this can go on for; but, with continued scope for international expansion, there doesn’t appear to be any significant disruption heading WH Smith’s way.”