Yahoo Finance WH Smith promises return to profit as it bets big on travel rebound
WH Smith has promised a return to “meaningful” profit next year after international travel restrictions and lockdowns battered its business.
Smiths today reported a trading loss of £55 million in the 12 months to the end of August and a total pre-tax loss of £104 million. Revenue sunk 13% to £886 million, dragged down by a 27% slump in travel revenues.
“Clearly the impact of Covid is still evident in the numbers we’ve reported,” CEO Carl Cowling told the Standard.
The newsagent, which also owns airport gadget shop InMotion and online greetings card retailer Funkypigeon.com, said travel was already rebounding and has made a big bet on airport expansion. Earlier this year it announced plans to open 100 new shops in airports over the next three years, with the majority in North America. Smiths has also won 30 bids to open new tech stores in 14 airports across the UK, including two concessions each in Gatwick, Heathrow, and Stanstead.
“Air travel has always consistently grown as the world’s population has grown,” Cowling said. “Business travel will recover at a slower rate but our brand is attuned to the leisure customer.”
Travel revenues are already at 84% of pre-pandemic levels and Cowling told the Standard sales had picked up even further since US travel restrictions were dropped at the start of this week.
“It’s early days. Sales in the American business on Tuesday and Wednesday were pretty strong,” Cowling said. “I think it will build.”
He added: “Heathrow was very, very busy on Wednesday.”
Rail travel is also bouncing back, boosting WH Smith shops in stations across the UK.
Elsewhere in the business, Funkypigeon.com enjoyed a record year and Cowling said the company was “pretty confident with our High Street business.” He said stores were well positions and performing strongly, with greeting card sales ahead of pre-pandemic levels. The company is refurbishing its shope in Euston to make it a new flagship for the WH Smith brand in the UK.
The company promised a return to “meaningful” profit next year. Analysts are forecasting a profit of £70 million, a figure Cowling said he was “comfortable with”.
Retailers are currently gearing up for the crunch Christmas trading period and Cowling said WH Smith was recruiting 500 extra staff to deal with the seasonal spike in demand.
Like other businesses, WH Smith has had to deal with supply chain problems and a tight labour market.
Cowling said he “reacted pretty quickly” after seeing “early warning signs” about possible job market problems. Smiths raised pay and bonuses for its HGV drivers as shortages hit elsewhere. Cowling declined to say by how much but said the increase was “significant enough.”
On its supply chain, Cowling said WH Smith had to “micro manage” the shipment of stock coming in from Asia. Christmas supplies arrived later than usual but Cowling said all shops were now fully stocked with wrapping paper and cards.
Shares dipped 11p to 1604p.
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