WH Smith boosts profit forecast as airport trade continues its recovery following relaxation of travel curbs
- WH Smith revealed total turnover grew by 23% for the 13 weeks ending 27 May
- Despite industrial action, the firm’s rail outlets achieved a 10% rise in revenues
- The FTSE 250 company has focused on expanding its travel arm in recent years
WH Smith has boosted its full-year forecasts as loosening Covid-related restrictions continued to lift airport store sales during the spring period.
The retailer’s total turnover increased by 23 per cent year-on-year for the 13 weeks ending 27 May, with modest growth in high street trade complemented by a solid performance from its travel business.
Sales in the UK travel arm expanded by almost a quarter, which the firm credited to a rebound in passenger numbers, the launch of new categories, as well as bumper trade at electronics-led InMotion shops.
Good results: WH Smith revealed that turnover increased by 23 per cent in the third quarter
Its railway-based outlets also achieved a 10 per cent rise in revenues despite footfall on some days being impacted by Aslef and RMT workers striking over pay and conditions.
At the same time, turnover grew by more than a quarter in its North American travel business but climbed by 79 per cent throughout the rest of the world thanks to a rebound across Australia and Asia.
WH Smith’s growth was also heavily driven by opening new establishments at transit destinations, including Newark Liberty International and Kansas airports in the US.
Since the start of last September, the FTSE 250 bookseller’s travel segment has won more than 70 store tenders, meaning it now has over 130 outlets yet to open.
In April, WH Smith predicted its travel division would provide approximately 70 per cent of revenues and about 85 per cent of earnings from trading operations by the end of the current financial year.
WH Smith said on Wednesday that its annual expectations have ‘modestly improved,’ adding that it was ‘in a good position as we approach the peak summer trading period’.
WH Smith shares were 2.4 per cent up at £15.65 on late Wednesday afternoon, although they remain significantly below their pre-Covid peak of about £26.60.
Trading for most of the first two years of the pandemic was severely depressed by cross-border travel restrictions and a surge in people working from home.
But while the company’s high street arm performed comparatively better at times, it has struggled for many years with weak sales and profits, underinvestment and stiff competition from retail giants like Amazon.
Instead, WH Smith has focused on expanding the travel business, buying a raft of former Dixons Travel outlets in summer 2021 and adding more InMotion stores.
Neil Shah, director of content and strategy at Edison Group, said: ‘WH Smith’s gradual transformation over the past two decades, transitioning from the high street to airport terminals, has played a crucial role in its resilience and expansion.
‘With strong trading momentum, a growing pipeline of new stores, and recovering passenger numbers, the company is well-positioned to seize the opportunities presented by the peak summer trading period and beyond.’
