WH Smith’s sales boosted by recovery in travel over the Christmas period
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WH Smith’s sales increased as travel traffic recovers over the Christmas period, but UK visitor numbers were held back by rail strikes
- Sales at the retailer shot up 41% in the 20 weeks ending January 14
- Sales at the company’s UK railway shops have been hit by recent strikes
- WH Smith has opened 40 new stores since the beginning of September
WH Smith praised an impressive start to the financial year as the rebound in travel over the festive period was a windfall for the group’s outlets.
Sales were up 41 percent in the 20 weeks ending Jan. 14, compared to last year, when trade was hit hard by the reintroduction of Covid-19 restrictions in response to the rise of the Omicron variant.
The easing of lockdown rules and skyrocketing airport sales boosted sales for the group’s UK travel arm by 70 percent, as did the strong performance of hospital stores and the InMotion technology accessories brand.
Recovery: Easing of lockdown rules and skyrocketing airport sales saw revenue at WH Smith’s UK travel arm rise 70 percent in the 20 weeks ending January 14
During the same period, travel sales grew by nearly a third in North America, while they almost tripled in the rest of the world as the group opened new branches in cities such as Brussels, Belgium and Kuala Lumpur, Malaysia’s capital.
Total revenue was also 20 percent higher than in 2019, albeit slightly lower on a like-for-like basis as airline and rail passenger numbers remain significantly below pre-pandemic volumes.
Widespread flight cancellations and delays have hampered recovery at the group’s airports, particularly in the UK and Europe, as airlines struggle to cope with the resurgence in passenger numbers due to labor shortages.
At the same time, visitor numbers at prominent UK commuter hubs were impacted by the pandemic-induced increase in home workers and a series of strikes over wages and conditions by rail workers.
Nevertheless, WH Smith said global passenger volumes continue to rise, even against a backdrop of heightened economic uncertainty.
After opening 40 new stores since early September, it has tenders to open another 130 locations, including Reagan National airports in Washington DC and Palm Springs in California.
Chief executive Carl Cowling said the company was “in its strongest position ever as a global travel retailer,” following impressive results and winning new tenders.
He added: “This strength, combined with the continued improvement in passenger numbers around the world, means we are confident in another year of significant growth in 2023.”
In November, WH Smith reinstated its dividend after revealing annual earnings had slightly beat expectations and as a reflection of confidence in future performance.
The FTSE 250 group had suspended shareholder payouts two years earlier when it was forced to close most of its locations at the outbreak of the pandemic.
As trade restrictions eased, demand recovered more quickly in the group’s high street stores, in part due to rising sales at its online brands, such as greeting card retailer funkypigeon.com.
However, during the most recent reporting period, the division’s like-for-like sales remained flat and 10 percent below pre-pandemic levels.
AJ Bell’s director of investment, Russ Mould, said: ‘For many years the UK high street operation has been something of an afterthought, run as efficiently as possible with firm control over costs.
“At some point, a debate about the role of the high street branch in the wider community may flare up and investors may look to sell or spin off a company with very different growth prospects.”
WH Smith shares were 2.2 per cent lower at £15.82 late Wednesday afternoon, though their value has still risen by more than a third over the past three months.