Boss who revived WH Smith set to step down

WH Smith chief executive Kate Swann will step down from the books and stationery retailer next summer, ending a decade-long tenure in which she helped to revitalise the company’s fortunes.

The group, which operates in more than 1,100 primarily UK-based stores, said yesterday that Steve Clarke, managing director of its high street division, would succeed Swann on July 1.

The company also posted a 10 per cent rise in full-year pre-tax profit to £102m.

Ms Swann is credited for an overhaul of the 220-year-old business that has seen it swap selling less profitable items such as CDs and DVDs for books and stationery, cut costs and expand into lucrative airport and railway station locations.

The former Argos managing director, who joined the company in November 2003, has also initiated share buyback programmes that have made WH Smith a darling of investors and analysts.

“Kate Swann has done a fantastic job orchestrating the turnaround of WH Smith. This is a blow, though she is handing over to a safe pair of hands in Steve Clark,” Seymour Pierce analyst Kate Calvert said.

Though UK retailers are generally struggling as shoppers rein in spending amid rising unemployment, weak wages growth and government spending cuts, WH Smith has fared better than most.

Ms Swann has improved margins with more profitable products, better sourcing and fewer markdowns. She has also rebalanced the high street and travel businesses.

The company’s mix of products has also changed towards core categories and its move away from entertainment products has been a shrewd one on the evidence of the difficulties at HMV and Game.

“Getting out of entertainment; nine years ago that was not a popular thing to do, it was a quarter of our sales, but it has clearly proved to be very helpful,” Ms Swann said, adding that she did not intend to retire when she leaves the company.

In the year to August 31, total like-for-like sales fell 5 per cent, with a record profit in its travel division and book sales boosted by the Fifty Shades trilogy.

WH Smith, which is expanding abroad through a mixture of franchises, joint ventures and direct leases, also announced £12m of additional cost savings, pushing its target to £25m over the next three years.

It said performance of its Kobo e-book reader – launched recently to compete with Amazon’s Kindle – was “ahead of plan” as it rolled out Kobo shops throughout 100 of its largest stores.

Some analysts said that Ms Swann’s departure raised questions over the longevity of the company’s cost-saving plans and margin gains in a tough high street environment.

“Our experience suggests that great chief executives tend to have uncanny timing in terms of knowing when to leave,” Espirito Santo analyst Sanjay Vidyarthi said.

“We suspect that the market may take that view, at least short term.”

WH Smith said that it proposed a final dividend of 18.6p per share, giving a total for the year of 26.9p, up 20 per cent on last year.