WH Smith upgrades annual outlook as airport trade continues its recovery

WH Smith has raised its full-year forecasts as the easing of Covid-related restrictions continued to boost airport retail sales over the spring period.

The retailer’s overall sales rose 23 percent year over year during the 13 weeks ended May 27, with modest high street growth complemented by a solid performance from the travel business.

UK travel sales grew by almost a quarter, which the company attributed to a recovery in passenger numbers, the launch of new categories and massive trade in electronics-led InMotion stores.

The rail outlets also achieved a 10 percent increase in sales, despite visitor numbers being impacted on some days by Asle and RMT workers’ strikes over wages and benefits.

At the same time, sales in the North American travel industry grew by more than a quarter, but in the rest of the world sales increased by 79 percent thanks to an upturn in Australia and Asia.

WH Smith’s growth was also strongly driven by the opening of new locations in transit destinations, including Newark Liberty International and Kansas airports in the US.

Since the beginning of September last year, the FTSE 250 bookseller’s travel segment has won more than 70 retail tenders, meaning that more than 130 outlets are now yet to open.

In April, WH Smith predicted that by the end of the current fiscal year, its travel division would generate about 70 percent of sales and about 85 percent of trading revenues.

WH Smith said on Wednesday that its annual outlook has “improved modestly,” adding that it was “in a good position as we approach the peak summer trading period.”

WH Smith shares were up 2 per cent on Wednesday morning at £15.58, though remaining significantly below their pre-Covid high of around £26.60.

Trade for most of the first two years of the pandemic was severely depressed by cross-border travel restrictions and an increase in people working from home.

But while the company’s high street arm has performed relatively better at times, it has struggled for years with weak sales and profits, underinvestment and fierce competition from retail giants like Amazon.

Instead, WH Smith has focused on expanding the travel business by purchasing a series of former Dixons Travel outlets in the summer of 2021 and adding more InMotion stores.

Neil Shah, director of content and strategy at Edison Group said: ‘WH Smith’s gradual transformation over the past two decades, moving from the high street to the airport terminals, has played a vital role in its resilience and expansion.

“With strong trading momentum, a growing pipeline of new stores and recovering passenger numbers, the company is well positioned to seize the opportunities presented by the peak summer trading period and beyond.”