WH Smith swings back to profit after travel market rebound

The group posted headline pre-tax profits of £61m for the year to August 31 against losses of £104m the previous year, when Covid restrictions impacted its retail chain and network of sites based at travel hubs worldwide.

WH Smith said total sales across its travel business surged past levels seen before the pandemic struck, at 130 per cent of 2019 revenue in the second half, or 92 per cent on a like-for-like basis. Its high street arm traded at 82 per cent of 2019 levels in the final six months, or 83 per cent on a comparable store basis. WH Smith resumed dividends for investors, with a final payout of 9.1p per share after the turnaround and as it said solid trading had continued into the new year, with travel sales at 148 per cent and high street at 87 per cent of 2019 revenues in the 10 weeks to November 5.

The group has been boosted by a sharp recovery at airport stores in particular over the summer amid a steep increase in holidaymakers travelling internationally as travel markets reopened worldwide. Across its UK travel division, which also includes hospital sites, sales in July and August jumped to 121 per cent and 126 per cent of 2019 levels, even with disruption at airports and caps to limit the number of passengers travelling.

WH Smith said: “Passenger numbers have recovered strongly, albeit with further recovery to go, and we are very well positioned to capitalise on the significant space growth opportunities across each of our markets.”

The group has been buoyed by expansion in the travel sector, having purchased US-based airport technology retailer InMotion in 2018.

It is rolling out 150 new stores across 16 countries, including 70 in North America and across airports such as Los Angeles, Salt Lake City, Brussels, Oslo and Melbourne.

Richard Hunter, Head of Markets at interactive investor, commented: “WH Smith has strongly swung back to profit, propelled by its travel business which is growing globally and has become the driving force of the business.

“ At the same time, the group has signalled its confidence in prospects by reintroducing the dividend. This is a symbolic gesture given that the projected yield is under 1 per cent, but nonetheless draws a line under a period of pandemic uncertainty.

He added: “WH Smith benefits from captive customers in many of its key sites, such as railway stations, motorway services, hospitals and, in particular, airports, which sets it aside from much of the retail competition.

"Overall, the numbers represent a shift in fortunes as the group edges more towards becoming a global travel retailer.”

He added: “The shares have fallen by 21 per cent over the last year, during which time the wider FTSE250 has dropped 20 per cent , although over the last six months the general direction of travel has improved. Indeed, unmoved by the tougher economic backdrop to come, the market consensus of the shares as a strong buy is reflective of both the group’s performance as well as its aspirations.”