WH Smith puts focus on foreign growth as high street dwindles
WH SMITH is pinning its hopes on rapid international expansion to offset an ongoing decline in profits on the high street.
The FTSE 250 retailer plans to open 26 sites outside the UK this year, including eight at Madrid Airport and seven in Rio de Janeiro Galeão Airport – its first ever shops in South America.
The retailer is also opening more sites in Australia, India, Malaysia and Alicante. It already has a presence in 48 airports and 27 countries outside the UK.
The company’s travel division, which includes its shops in train stations and airports, continues to outstrip its high street division.
For the six months to Feb 28, profits rose 5pc in its travel arm to £41m, compared to a 6pc slide on the high street to £50m. Overall pre-tax profits slipped 1pc to £82m, while revenue was flat at £643m. The retailer raised its interim dividend by 10pc to 16p per share.
Stephen Clarke, the chief executive, said: “Given what’s going on in the UK high street, for that to be our third best profit number in 15 years, I think is a good demonstration that the strategy that we’ve had in place for the last 15 years, which we haven’t changed, is especially fit for purpose for today’s trading environment.”
WH Smith has kept profits healthy by cutting costs where possible. In the last two years its high street stores have also been lifted by sales of parody books and the adult colouring trend.
While revenue declined 5pc in the retailer’s 610 high street stores, Mr Clarke said he did not see any need to close outlets. Shares in the company closed up 2pc at £20.18.
Stephen Clarke, CEO, said the group’s strategy of 15 years is continuing to pay off in the current trading environment