Yahoo Finance WH Smith travel division soars higher but high streets remain tricky
WH Smith’s stores in train stations, airports and hospitals have continued to perform well but high street sites remain in decline, the company said.
Bosses revealed sales rose 7% in the 20 weeks to January 18, but a 5% fall in revenues in its high street division offset a strong 19% jump in travel.
Chief executive Carl Cowling said the integration of its new North American business Marshall Retail, which was bought for 400 million US dollars (£312 million), is progressing well.
He added that since announcing the deal last October, the company has won a further eight new units in the US.
But on WH Smith’s high street division, Mr Cowling would only say: “In UK travel, we have seen continued growth across all our key channels and we are on track to open a new flagship pharmacy format at Heathrow Terminal 2 this summer.
“Our high street strategy continues to deliver through continued gross margin gains and tight cost control.”
When stripping out the purchase of Marshall Retail and InMotion – a separate travel accessories business – like-for-like sales in travel rose 3%.
Around 15 to 20 new stores are expected to be open in travel locations across the UK this year, including eight in hospitals.
On the high street, the company continues cutting costs, and Mr Cowling – who took the top job in November – said a further £3 million of savings have been identified. Total savings for the year will be around £12 million with “gross margin growth” in profits.
But investors were less impressed, with shares dropping 1.4%, down 34p to 2,506p, in early trading.
Ed Monk, associate director at Fidelity Personal Investing, said WH Smith now has more overseas travel stores than UK ones – calling the division “the engine room of the company”.
He added: “WH Smith has been on a winning streak with markets lapping up whatever news comes out of the retailer.
“The shares are trading at 22 times earnings, but this represents a dip from recent highs. Many will no doubt be looking for the right time to buy.”
The retailer also revealed separately that more than one in 10 investors gave the thumbs down to pay plans for top bosses at its annual general meeting on Wednesday.
While the plans were approved, it saw 12.2% of votes cast against its remuneration report – a result which comes after the Investment Association (IA) issued an alert over Mr Cowling’s salary package.
The IA warned over the retailer’s decision to award its new boss a pension contribution worth 12.5% of his salary, which the association said was not in line with the average worker.
The AGM also saw 3.5% of investor votes made against the election of Mr Cowling to the board.
