Lockdown hits WH Smith travel stores
● Retail stalwart also forced to close vast majority of its high street outlets
WH Smith, one of the oldest names on the British high street, has warned over a “significant hit” since March as the lockdown forced it to close its profitable travel branches in railway stations and airports.
Releasing its latest financial results, the retail stalwart said total revenues plunged 85 per cent in April, with sales crashing 91 per cent across its travel arm – which accounts for more than half of its annual turnover – and 74 per cent in its high street chain.
WH Smith said it had temporarily closed the majority of its 1,194-strong stores in the travel business, though it kept about 130 open in UK hospitals to help serve frontline NHS staff and has extended its grocery ranges in these outlets amid the crisis.
The travel arm has been a major engine for growth of the business in recent years, helping offset tough UK high street conditions.
As well as a presence across Britain’s travel network, WH Smith also operates in over 100 international airports.
The group kept 203 of its high street stores with Post
Office operations open amid the lockdown, but temporarily shut the bulk of the 575-strong chain.
Group chief executive Carl Cowling said: “Since March, we have seen a significant impact on our business as a result of Covid-19, with the majority of our stores closed around the world.
“We are a resilient and versatile business and with the operational actions we have taken including managing costs and the new financing arrangements, we are in a strong position to navigate this time of uncertainty and are well positioned to benefit in due course from the normalisation and growth of our key markets.”
WH Smith pointed to a jump in online sales, with book sales surging 400 per cent as lockedin Brits looked for ways to pass the time at home.
It said it was working on plans for a phased reopening of stores over its second half, focusing on driving spend per passenger across its travel chain as outlets begin trading again. The group has furloughed a “significant” number of its staff across stores and head offices, while also axing its interim shareholder dividend payout amid cost-cutting efforts.
A robust first-half performance saw the firm post a 3 per cent fall in pre-tax profits to £63 million, with the result up 1 per cent at £93m on an underlying basis.
“There was very little impact of Covid-19 on our first-half results, however inevitably the performance in the second half will be very different,” added Cowling.
John Moore, senior investment manager at Brewin Dolphin, said: “Prior to the Covid-19 crisis, WH Smith was a tale of two businesses: its high street retail operation was in decline and its travel outlets were on the rise.
“That trend is reflected in its latest numbers, which show the travel business now accounts for more than half of trading profits. In that sense, Covid-19 could not have come at a worse time for WH Smith, as it focused on growing its travel arm.”
Adam Vettese, an analyst at etoro, added: “It is still unclear as to when and how we will get back to normality postcovid-19 which could be a real worry for high street retailers like WH Smith.”
“Covid-19 could not have come at a worse time for WH Smith, as it focused on growing its travel arm”
JOHN MOORE, ANALYST