WH Smith shrugs off railway strikes as sales are boosted by holiday makers
- Sales at the retailer increased by 28% over the twelve months ending in August
- The travel business continued to benefit from the easing of Covid-related curbs
- The company recently said it would no longer open UK high street shops
A solid summer break recovery has led WH Smith to brush aside the effects of the rail strikes as airport sales boom and expand across the US.
Sales at the High Street Come Travel Hub retailer rose 28 percent over the 12 months ended August.
Revenues in the first half grew more than double the pace in the subsequent six months, as the first period surpassed the rise of the Omicron variant a year earlier.
WH Smith’s travel industry continued to benefit from the lifting of the latest pandemic-related restrictions at home and abroad, allowing Britons to go abroad again.
Moving again: WH Smith’s travel industry continued to benefit from the easing of pandemic-related restrictions, allowing people to go abroad again
WH Smith also praised its “focused in-store strategy” for achieving higher average transactions and expanding product offerings in categories such as technology, health and beauty.
Sales at the company’s UK travel centers rose by more than a third, and the company said sales were boosted not only by rising airport trade, but also by the strong performance of its hospital-based outlets.
The company said demand remained resilient on the rail channel as well, despite visitor numbers being impacted by rail workers who staged a series of strikes over wages and working conditions.
Meanwhile, travel sales grew 31 percent in North America, where the group increased its market share and opened a further 43 stores, while nearly doubling in the rest of the world.
This compensated for a modest drop in sales in the traditional retail district, which had been struggling for some time with underinvestment and significant competition from retail giants such as Amazon.
Carl Cowling, the company’s CEO, said in late June that the company would no longer open UK high street shops to focus on overseas expansion and travel hubs.
The Swindon-based retailer expects to open more than 80 new stores by August 2024, about half of which will be in North America.
Analysts at RBC Capital Markets said: ‘We believe WH Smith’s forensic approach to retail should serve well to successfully expand in the global travel essential retail segment.
“We remain attracted to the longer-term growth potential in the travel retail markets, which can offer longer-term consolidation potential.
“Consumer demand for travel remains strong, and (WH Smith) should be helped by the relatively small size of the travel basket in a more difficult consumer environment.”
For the past fiscal year, WH Smith predicted that the travel industry would derive more than 70 percent of its revenues and about 85 percent of its profits from trading activities.
Analysts expect the company to make £143 million in annual pre-tax profit, compared to £61 million the year before.
WH Smith Shares were 5.6 per cent, or 83p, lower on Wednesday morning at £14.01, meaning they are down 46 per cent since the start of 2020.