WH Smith plunges into the red amid deserted railway stations and airports
The retailer – one of Britain’s oldest, tracing its roots back to 1792 – lost £226m before tax at the bottom line in the 12 months to the end of August, compared with a £135m profit a year earlier. Underlying pre-tax losses were £69m, slightly less than analysts had been forecasting.
Revenue was down 33 per cent to just over £1 billion, after a strong start to the year was interrupted by the virus.
Chief executive Carl Cowling said: “The group delivered a strong first half performance and traded strongly prior to the outbreak of Covid-19.
“Since March, we have been heavily impacted by the pandemic. Despite the many challenges faced, we responded quickly and took decisive actions to protect our colleagues, customers and the business, including strengthening our financial position.”
Things had started looking up again, but last week England entered a second lockdown, leaving businesses that rely on physical sites in a tricky position. After the announcement, WH Smith has 558 high street and 243 travel shops open.
Bosses said they had learnt the lessons from the first lockdown and could quickly furlough staff and manage their supply chain.
“We are expecting a significant decline in passenger numbers as a result of travel bans with the majority of our stores at airports and railway stations temporarily closed,” it noted.
The travel business has been particularly badly hit since March. Over the last year revenue plunged 39 per cent in the travel segment. Even its stores located within hospitals saw revenue fall by 15 per cent as visitors stayed away from health facilities.
Analysts were expecting the firm to present a tough set of results, with some at Investec already describing it as a “write-off” year.
Cowling added: “While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85 per cent of passengers are domestic, is beginning to see some encouraging signs of recovery.
“In addition, we continue to open new stores in the US and win significant tenders across major US airports.
“In high street, we had seen a steady recovery and we were well set up both in stores and online as we went into the second lockdown.”
In August, the firm warned that it might cut some 1,500 jobs after sales tapered off.
Freetrade analyst David Kimberley noted: “The group had managed to defy the doom and gloom of Britain’s high streets over the past decade by focusing heavily on travel locations at train stations and airports.
“Today’s results show the group still wants to continue in that direction, with the company upbeat about future prospects, growth opportunities and continuing the group’s travel-focused strategy.
“As confident as they might seem, it is seriously hard to imagine any short-term recovery for WH Smith. News of a vaccine may have given hope to some investors but this is still likely to be a long way off and even then it’s hard to say whether we’ll all simply return to travel in exactly the same manner as before.”
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