WH Smith back in profit as travel rebounds: investors given 'symbolic gesture'
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The 230-year-old group posted headline pre-tax profits of £61 million for the year to the end of August against losses of £104m the previous year, when Covid restrictions impacted its retail chain and network of sites based at travel hubs such as airports and railway stations. It said total sales across its travel business surged past levels seen before the pandemic struck, at 130 per cent of 2019 revenue in the second half, or 92 per cent on a like-for-like basis. The high street arm traded at 82 per cent of 2019 levels in the final six months, or 83 per cent on a comparable store basis.
WH Smith also resumed dividends for investors, with a final payout of 9.1p per share after the turnaround and as it said solid trading had continued into the new financial year, with travel sales at 148 per cent and high street at 87 per cent of 2019 revenues in the 10 weeks to November 5. The group has cheered a sharp recovery at airport stores in particular over the summer amid a steep increase in holidaymakers travelling internationally as travel markets reopened.
Across the company’s UK travel division, which also includes hospital sites, sales in July and August jumped to 121 per cent and 126 per cent of 2019 levels, even with disruption at airports and caps to limit the number of passengers travelling.
Chief executive Carl Cowling said: “2022 has been a successful year for WH Smith and we enter the new financial year with the group in its strongest ever position as a global travel retailer with multiple growth opportunities across the world. Our high street division, including our online businesses, delivered another resilient and profitable performance. These businesses continue to generate strong cash flow allowing us to invest across the group.”
The group has been buoyed by expansion in the travel sector, having purchased US-based airport technology retailer InMotion in 2018. It is rolling out 150 new stores across 16 countries, including 70 in North America and across airports such as Los Angeles, Salt Lake City, Brussels, Oslo and Melbourne.
Cowling added: “We have started the year well and, while there is economic uncertainty, travel patterns globally continue to improve and this, combined with the strength of the group’s growth opportunities, means that we are well positioned for a year of significant progress in 2023.”
Richard Hunter, head of markets at investment platform Interactive Investor, noted: “WH Smith has strongly swung back to profit, propelled by its travel business which is growing globally and has become the driving force of the business. At the same time, the group has signalled its confidence in prospects by reintroducing the dividend. This is a symbolic gesture given that the projected yield is under 1 per cent, but nonetheless draws a line under a period of pandemic uncertainty.”