WH Smith hauls in profits

The 221-year-old group, also said on Thursday it would buy back another £50m of shares, having completed a programme of the same amount announced last August.

It also increased targeted cost savings in its high street business to £22m over the next three years.

Data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of gross domestic product, but retailers remain wary as inflation continues to outpace wage rises.

“Looking to the year ahead, we continue to plan cautiously in an uncertain environment, however we are a resilient business and are well positioned for continued growth in both the UK and internationally,” said chief executive Steve Clarke, who succeeded Kate Swann in July.

WH Smith, which trades from over 1,200 stores, made a pre-tax profit of £108m in the year to August 31.

That compares with analysts’ consensus forecast of £107m and £102m made in the 2011-12 year.

Total sales fell five per cent to £1.19bn, with like-for-like sales down five per cent.

However, the firm’s gross margin improved 180 basis points due to better buying and a sales mix of more profitable products.

WH Smith’s travel division - outlets at airports, railway stations, motorway service stations, hospitals and work places - posted a five per cent rise in trading profit to £66m, while the firm’s traditional high street business made £56m, up four per cent.

The firm ended the period with net cash of £31m and raised its dividend payout by 14 per cent to 30.7p.

Shares in WH Smith, up 27 per cent over the last year, closed on Wednesday at 835p, valuing the business at £1.04bn.