WH Smith results set to make good reading after cost-cutting and expansion

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THE fortunes of the high street will be in focus next week, with WH Smith expected to notch another year of profit growth and Game Digital set to mark its revival with its first set of results since returning to the stock market.

WH Smith is poised to achieve another boost in annual profits on Thursday as it continues its dual policy of cutting costs at its high street shops and expanding its travel business.

The books and magazines retailer, which runs 607 high street shops, should report full-year profit up 9.7 per cent to £113m as chief executive Steve Clarke continues with a strategy he inherited from previous boss Kate Swann.

The group also runs 701 travel outlets at airports, railway stations and motorway services, including 118 international units.

In April, Mr Clarke told investors he planned to open around 30 travel sites in the UK in this financial year and had won contracts to open 15 further international sites.

Like-for-like sales in both parts of the group have been consistently negative since 2005 but the retailer’s strategy of focusing instead on margins is admired by City analysts.

However, the growing travel business posted flat like-for-like sales in a June trading update and could report a positive performance in the full-year results.

The business is also coming to the end of one of its regular share buyback programmes that is distributing £50m to shareholders.

Numis analyst Matthew Taylor said he expects the group to deliver another year of solid progress and thinks it will “stick with a strategy that has served shareholders so well in recent years”.

Game Digital is expected to report a strong set of annual results on Thursday, just two years after the video gaming retailer collapsed into administration.

The company, which has 327 UK stores and 233 in Spain, is on course for a doubling in adjusted earnings to £51.1m, according to Canaccord Genuity.

The business, which returned to the stock market in June, said in an August trading update that sales had ridden by around 30 per cent over the year as its UK and Spanish businesses gained market share.

Analysts at Canaccord said Game was taking advantage of strong demand from the latest generation of gaming consoles, PS4 and Xbox One, while brokers at Liberum added that it has been boosted by top-selling games such as Watch Dogs.