WH Smith chief executive to bow out with profits on the rise

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BOOKS and stationery retailer WH Smith posted a 5 per cent rise in pre-tax profits in the first half of 2013, with cost cuts helping to improve gross margin and offset falling sales, the company said yesterday.

Pre-tax profit for the group hit £69m for the six months ending February 28, as the company’s travel operations in airports, railway stations and motorway service areas posted profits up 7 per cent.

That outperformed the high street part of the business where pre-tax profit grew just 2 per cent.

Overall, group total sales on a like-for-like basis were down 5 per cent but gross margin improved 160 basis points, helped by cost cutting.

“We expect the trading environment to remain challenging however the business is in good shape and is well positioned for continued growth in both the UK and internationally,” said Kate Swann, making the last results announcement before she stands down as chief executive in July.

Swann, 49, is credited for turning around the business, streamlining operations and initiating buyback programmes that have helped WH Smith win favour with investors and analysts.

Shares in the group are up 51 per cent in the last three years.

Steve Clarke, managing director of the company’s high street division, will take over as chief executive on July 1.

The company has also gained a foothold in the Chinese market – it is set to open 30 kiosks in China, as part of a total of 121 units either opened or won in its international division.

WH Smith has more than 50 high street stores in Yorkshire, plus a number of travel outlets.

“This will be Kate Swann’s last set of results and was therefore unlikely to bring any negative surprises.

“The numbers and the tone are all very much in line with our expectations and we can now look at our H2 estimates more closely, which we think are cautiously set,” said Espirito Santo analyst Caroline Gulliver.