WH Smith warns of worst month after festive surge fizzles out

WH Smith, one of the oldest names on the high street, is heading for its worst month since at least September despite a strong festive trading period and hundreds of its stores remaining open.

Many of the WH Smith high street stores, including this one in Dunfermline, house a Post Office branch, and remain open throughout lockdown. Picture: Scott Reid

The retailer said sales so far in January have been 46 per cent of the same period a year earlier. It marks a big slide from last month, when the chain outperformed expectations, notching up 67 per cent of the sales it made in December 2019, and even higher in its high street stores.

The retailer – one of Britain’s oldest, tracing its roots back to 1792 – plunged £226 million into the red in November as the pandemic forced the temporary closure of hundreds of stores and hammered its normally busy travel sites in airports and railway stations.

In its latest trading update, chief executive Carl Cowling told investors: “In our high street business, we worked hard to navigate our way through the evolving Covid restrictions as we approached the Christmas trading period.

“This positioned us well, resulting in a better-than-expected Christmas with sales in December at 92 per cent of 2019 levels. Our online businesses continued to deliver significant year-on-year growth in the period.”

January has proved trickier for many retailers as much of the UK remains under strict lockdown measures. Both of the business’s main arms, its travel and high street stores, were badly hit across the month.

Travel has proven the more susceptible, and sales slumped to 30 per cent of last year’s levels, but the figures had also been low in December.

“In our travel business, we saw little change in the environment prior to the current lockdown, as expected, with sales in December at 36 per cent of 2019 levels,” Cowling added.

“In North America, we have seen a quicker recovery versus the rest of the world, given the higher volume of domestic travel.”

The firm said it was currently trading from the majority of its high street stores, including more than 200 with post offices, and some 200 UK travel stores, including 130 hospital branches serving frontline NHS workers.

The group had £340m of available cash and facilities as of the end of December.

WH Smith said it had not experienced any disruption over the period due to the UK’s exit from the European Union. It does not expect Brexit to have a material impact on its ability to import stock in the coming year.

John Moore, senior investment manager at investment manager Brewin Dolphin, said: “With a heavy reliance on travel, WH Smith is among the retailers most disrupted by the pandemic – compromising its previous status as one of the unlikely high street success stories.

“However, the business has adapted well and is trading ahead of where many would expect it to be, with reasonable amounts of cash to see it through.

“The faster recovery of its US business also underlines the importance of its 2018 acquisition of InMotion and, with that, geographical diversification. The key question for WH Smith is when and to what degree travel will return in the future, which remains the biggest risk the business faces.”

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