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WH Smith booms as travel returns post Covid and US arm takes off

WH Smith resumed dividends for investors (John Stillwell/PA) (PA Wire)
WH Smith resumed dividends for investors (John Stillwell/PA) (PA Wire)

WH Smith today looked on track to be one of the few UK retailers to crack America as its travel arm looks to expand across the globe and it resumed dividend payments to investors.

Under new-ish CEO Carl Cowling the retailer dubbed the worst on the high street for two years running in Which? polls in 2018 and 2019 is now looking at world expansion.

In particular the US airport arm, including the tech shops InMotion, are booming. Profits from this business will overtake those from the UK high street this year.

The company saw revenues for the year jump from £886 million to £1.4 billion, with profits of £73 million compared to a loss last time of £55 million.

Cowling says the business is in “its strongest ever position as a global travel retailer with multiple growth opportunities across the world”.

WH Smith still has 530 stores on the high street, but analysts say the company will focus investment on the travel arm. In the UK, the health and beauty offer will expand at London train stations such as Paddington. That offers serious competition to Boots.

The statement today said: “We will be trialling our one-stop-shop for travel essentials format in Rail across a further eight major Network Rail locations, including London Paddington, London Victoria and London Liverpool Street stations. Across these stores, we will be investing in new store layouts and enhancing the space afforded to categories such as health and beauty.”

In the US, its localised airport stores are now a serious rival to the main brand Hudson News, increasingly seen as outdated by retail watchers.

Tesco and M&S are among the litany of UK retailers who have made bold moves into the US market and failed.

WH Smith is confident enough to resume dividend payments, suspended during the Covid crisis that saw travel severely curtailed.

A final divi of 9.1p a share will be paid.

The strength of the American business and the weakness of the pound does flatter the results somewhat.

Broker Peel Hunt upped its forecasts, saying: “The upgrade is currency-driven but it should please the market short term: longer term we think this is a top quality business that warrants a much higher multiple as contracts are won.”

The shares rose 27p to 1314p, which leaves the business valued at £1.7 billion.