WH Smith shrugs off rail strikes as sales are buoyed by holidaymakers
- Turnover at the retailer increased by 28% for the 12 months ending August
- Its travel arm continued to benefit from the loosening of Covid-related curbs
- The firm recently said it would not be opening any more UK high street shops
A solid recovery in summer holiday travel has led WH Smith to shrug off the impact of rail strikes as sales boomed at airports and it expanded in the US.
Turnover at the High Street-cum-travel hub retailer increased by 28 per cent for the 12 months ending August.
First-half revenues rose at over double the rate they did in the following six months, due to the former period lapping the Omicron variant’s emergence a year earlier.
WH Smith’s travel business continued to benefit from the removal of the last pandemic-related curbs at home and overseas, enabling Britons to head abroad again.
Moving again: WH Smith’s travel business continued to benefit from the loosening of pandemic-related curbs that have enabled people to go abroad again
WH Smith also credited its ‘focused in-store strategy’ for delivering higher average transactions and widening the range of products on offer from categories like technology, health and beauty.
Sales at the company’s UK travel hubs climbed by more than a third, and it said that revenue was boosted not just due to rising airport trade but also a strong performance by its hospital-based outlets.
The firm said demand also remained resilient at its rail channel despite footfall being impacted by railway workers staging a series of strikes over pay and conditions.
Meanwhile, travel sales grew by 31 per cent in North America, where the group boosted its market share and opened another 43 shops, while they nearly doubled throughout the rest of the world.
This offset a modest drop in sales at its traditional high street operation, which has struggled for some time with underinvestment and significant competition from retail giants like Amazon.
Carl Cowling, the firm’s chief executive, said in late June that the company would not be opening any more UK high street shops in order to focus on overseas expansion and travel hubs.
The Swindon-based retailer expects to open over 80 new shops by August 2024, with around half launching in North America.
Analysts at RBC Capital Markets said: ‘We believe WH Smith’s forensic approach to retailing should stand it in good stead to expand successfully in the global travel essential retail segment.
‘We remain attracted to its longer-term growth potential in captive travel retail markets, which may offer consolidation potential longer term.
‘Consumer demand for travel remains strong, and [WH Smith] should be helped by its relatively low basket size in a tougher consumer environment.’
For the last financial year, WH Smith has predicted the travel business would provide over 70 per cent of revenue and approximately 85 per cent of profit from trading operations.
Analysts anticipate the firm making £143million in annual pre-tax profits, compared to £61million the previous year.
WH Smith shares were 5.6 per cent, or 83p, lower at £14.01 on Wednesday morning, meaning they have slumped by 46 per cent since the beginning of 2020.
