WH Smith proves its resilience in tough high street conditions

The 4 per cent fall in same-store sales for the 15 weeks to last Saturday was better than April’s 6 per cent decline and came despite tough comparisons with last year when the Royal Wedding boosted demand for newspapers and magazines.

Like-for-like sales at its stores situated in airports, railway stations and motorway services areas were down by 3 per cent, while both divisions grew margins.

Investec Securities increased its profits forecast by £1m to £100m for the year to August 31.

Investec analyst David Jeary, who has a buy rating on the stock, said the small ticket nature of the business, with average transaction values of around £5, worked in its favour in the current climate.

He also highlighted the strength of management, led by chief executive Kate Swann, and said the margin gains looked set to continue.

Ms Swann has been credited for guiding the business through the retail storm by ditching CDs and DVDs and focusing on higher margin products such as stationery and books.

It made £8m of cost savings in its high street division in the first half of its financial year – £2m more than expected – and is cutting a further £3m in the current half year.

The group, which has around 1,200 stores, including 586 in the travel division, said: “The economic environment remains uncertain and whilst we continue to be cautious about consumer spending, we remain confident in the outcome for the full year.”

Among recent developments, WH Smith has started selling the Kobo e-reader device to help compete with Amazon’s Kindle and Apple’s iPad.

n A subsidiary of newspapers, magazines and books wholesaler Smiths News has acquired a Dutch book supplier to libraries across Northern Europe for 700,000 euros (£565,000).

Bertrams Books will buy Houtschild Internationale Boekhandel, which in the year ending June 30 generated revenues of £3.9m.