Covid-19 outbreak could hit WH Smith sales by up to £130m

WH Smith said it believes the Covid-19 outbreak could knock up to £130m off its revenues for the current financial year.

The retailer said it is also currently predicting that the outbreak will impact upon underlying pre-tax profits by between £30m and £40m for the year to August 2020.

WH Smith said it has had a “significant impact” on its Asia Pacific travel business, as well as a “material reduction in passenger numbers” at airport sites in the UK, US and Europe.

The update came as WH Smith reported that its fast-growing travel business helped offset high street decline to drive the group to sales growth over the past six months.

It said it believes Covid-19 will result in a “reduction in our expectations for revenue and profit across the travel business for the second half”, on the basis of a “challenging” third quarter and “modest normalisation” in the fourth quarter.

In a trading update, the company said: “WH Smith is a resilient business with a strong balance sheet, substantial cash liquidity and strong cashflow.”

The retailer said revenues for its UK travel business are predicted to fall 15% below forecasts for the next six months, with a 35% decline in March and April.

It said it predicts sales in the US division and the rest of its international business will fall 20% below forecasts for the half-year.

WH Smith also recognised that the virus “could result in reduced high street footfall”, but said it has not yet seen a significant impact on the high street arm.