WH Smith’s profits surge amid sustained recovery in airline travel
WH Smith benefits from continued recovery in ‘jewel in the crown’ air travel and more store launches
- The retailer reported a pre-tax profit of £45m for the six months ended February
- During the last six months, the company opened 62 more outlets
- Strong results in the company’s travel divisions helped push sales above pre-pandemic levels
WH Smith’s profits more than doubled thanks to a recovery in airport passenger numbers and the opening of new stores.
The FTSE 250 retailer reported a pre-tax profit of £45m for the six months ended February, up from £18m last year and beating market expectations of £42.6m.
All travel divisions posted a strong performance, boosting total revenue by 41 per cent to £859m – just above pre-pandemic levels.
Strong performance: WH Smith reported a pre-tax profit of £45m for the six months ended February as it benefited from a relative lack of travel restrictions
Revenues in the UK were up 66 per cent, mainly due to huge trade at the airport’s outlets, including the technology-focused InMotion stores and major stores at London’s Gatwick and Heathrow airports.
Sales in the rail channel were impacted by successive strikes, but still grew by a quarter, while the launch of new stores boosted sales in the hospital stores by about a third.
During the last six months, it opened an additional 62 retail sites, just under half of which are in North America and others in countries such as Australia, Spain, Belgium and Malaysia.
This helped increase sales by 53 percent in the former region and more than triple in the rest of the world.
Store openings are a core element of the Swindon-based company’s growth strategy. More than 120 branches are currently slated to open in the travel segment.
The bookseller expects the division to account for about 70 percent of sales and about 85 percent of trading revenues by the end of this fiscal year.
Carl Cowling, CEO of WH Smith, said: ‘We delivered a strong performance in the first half of the year, further strengthening our confidence in the outlook for our global travel business.
“Looking forward, we are very well positioned to benefit from the substantial growth drivers in our markets and expect to make further good progress in the coming years.”
The company’s high street arm has long struggled with weak sales and profits amid years of underinvestment and online competition from the likes of Amazon.
Despite the high demand for Prince Harry’s best-selling autobiography ‘Spare’ and the healthy business around Mother’s Day, the division’s revenues fell slightly.
“Today it is clear that the board of directors views travel as the crowning achievement,” noted Julie Palmer, a partner at corporate restructuring specialist Begbies Traynor.
She added: “For now, with the tourism industry still thriving and the international expansion strategy storming ahead, all is rosy and the high street may be plodding on, but there may come a time when international travel is less appealing to those with little money. consumers and more serious questions should be asked of this department.’
WH Smith shares were 2.5 per cent lower at £15.83 on Thursday morning, though they have grown by about 43 per cent over the past three years.