WH Smith in high street over­haul amid re­tail woe

Western Daily Press - - Business - HOLLY WIL­LIAMS PA Deputy City Edi­tor

RE­TAILER WH Smith has launched an over­haul of its un­der-pres­sure high street busi­ness as it re­vealed slid­ing sales and prof­its at the divi­sion.

The group, based in Swin­don, said it had be­gun a de­tailed re­view of the high street busi­ness, which will see it close six stores and wind down tri­als such as its 20-strong Card­mar­ket chain and fran­chised con­ve­nience store arm WH Smith Lo­cal.

WH Smith, which has 839 travel out­lets and 607 high street stores in the UK, said the move was de­signed to “bet­ter struc­ture the busi­ness for the fu­ture”.

It will also see a re­struc­ture of some op­er­a­tional ac­tiv­i­ties and a re­newed fo­cus on core ranges.

One-off costs of the re­view sent group pre-tax prof­its down four per cent to £134 mil­lion for the year to Au­gust 31.

Shares tum­bled as much as 12 per cent af­ter the re­sults, with the stock also un­der pres­sure amid a wider mar­ket sell-off.

But with these costs stripped out, un­der­ly­ing pre-tax prof­its rose four per cent to £145 mil­lion.

WH Smith saw trad­ing prof­its in its high street stores fall three per cent to £60 mil­lion, but this was off­set by a seven per cent rise in prof­its at its travel arm to £103 mil­lion.

The group said high street like-for­like sales dropped three per cent, al­though it said the “slime” craze helped drive an “en­cour­ag­ing” per­for­mance in the fi­nal six months.

Sales rose three per cent across its out­lets based in air­ports and rail­way sta­tions.

Stephen Clarke, group chief exec- utive of WH Smith, said: “We had a good year in high street de­spite the well-doc­u­mented chal­lenges of the UK high street.

“Dur­ing an en­cour­ag­ing sec­ond half, the busi­ness traded well and we quickly iden­ti­fied the lat­est trend in the mar­ket, be­com­ing a one-stop­shop for all slime-re­lated prod­ucts.

“De­spite this good per­for­mance, we are not ig­nor­ing the broader chal­lenges on the UK high street and, dur­ing the sec­ond half, we con­ducted a busi­ness re­view to en­sure our high street busi­ness is fit for pur­pose now and for the fu­ture.”

Un­der the re­struc­ture, WH Smith plans to close the 20 Card­mar­ket stores as their leases come to an end, with af­fected staff trans­fer­ring to nearby WH Smith stores.

The WH Smith Lo­cal fran­chises – which are run as con­ces­sions within in­de­pen­dent newsagents and con- ve­nience stores – will be wound down as con­tracts come to an end.

It also plans to keep slash­ing costs to shore up prof­its, hav­ing de­liv­ered sav­ings of £12 mil­lion over the past fi­nan­cial year, with an­other £9 mil­lion ear­marked for 2018-19.

WH Smith said in its full-year re­sults that, de­spite fall­ing, its high street trad­ing profit was the third high­est re­ported in the past 15 years.

It said prof­its in the sec­ond half were up £1 mil­lion on a year ear­lier, while the de­cline in like-for-like sales also eased to two per cent.

Ge­orge Salmon, an eq­uity an­a­lyst at Har­g­reaves Lansdown, said: “WH Smith is a rare beast among the UK high street names in that it’s de­liv­er­ing con­tin­ued un­der­ly­ing profit growth. But that per­for­mance masks the fact Smith’s high street divi­sion is fac­ing some pretty tough chal­lenges.”

WH Smith says the lat­est move is aimed to bet­ter equip it for the fu­ture

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