WH Smith shares surge to top FTSE 100 as retailer’s revenues surpass pre-pandemic levels for the first time
- Total revenues at the book and stationery seller were 7% up on three years ago
- WH Smith’s high street trade was hit by the recent cyber attack on Funky Pigeon
- Its travel sales outside the UK and North America remain below pre-Covid levels
WH Smith was the FTSE 100’s top riser on Wednesday morning after the retailer revealed sales had surpassed pre-Covid levels, buoyed by the travel sector recovery.
Despite trade at its high street business remaining subdued, the book and stationery seller revealed total revenues in the 15 weeks to 11 June were 107 per cent of their equivalent volumes three years ago.
WH Smith shares climbed 7.6 per cent to 1,461.5p during the late morning, making it the best-performing stock on the FTSE 100.
Recovery: The book and stationery seller revealed total revenues in the 15 weeks to 11 June were 107 per cent of their equivalent volumes three years ago
Sales in its travel division were 23 per cent ahead of their 2019 levels thanks to a rebound in international excursions boosting purchases at the company’s airport outlets across the world.
This especially boosted the group’s North American arm, which saw the most robust recovery in travel revenues, driven by a healthy performance at its Las Vegas shops.
Meanwhile, UK demand was buoyed by the recent opening of stores belonging to its InMotion digital technology brand at airports such as Glasgow, Heathrow and Stansted, many of which were former Dixons Travel establishments.
WH Smith bought 17 of these shops last year after electricals seller Dixons Carphone announced the closure of its airport operations due to the pandemic clobbering the airline sector and the abolition of a VAT refund scheme for tourists.
The Swindon-headquartered company has said it hoped the new outlets would provide around £60million in annual sales once the travel market fully revives.
Demand across all markets during the end of last year and the start of 2022 was impacted by the Omicron variant’s emergence and the resulting reimposition of cross-border restrictions.
Expansion: WH Smith’s UK business was buoyed by the recent opening of stores belonging to its InMotion digital technology brand at airports such as Glasgow, Heathrow and Stansted
Before then, the business had seen a revival in revenues for some months as governments progressively loosened rules on foreign travellers entering their countries.
Yet, while restrictions are much weaker now, the group’s travel sales outside the UK and North America were still below pre-Covid levels for the most recent reporting period. However, they were 40 percentage points up on the second quarter.
Total revenues across its high street chain also remained around a fifth below 2019 levels, even as the FTSE 250 business observed significant demand for its Platinum Jubilee ranges.
WH Smith said this performance included the impact of the cyber attack on Funky Pigeon, its online greeting cards subsidiary, which had to temporarily suspend orders back in April.
Nonetheless, the firm expressed optimism about further growth, with another 125 stores in the pipeline, the robust trade in its travel division expected to last into the peak summer period, and full-year trading predicted to hit the higher end of analysts’ forecasts.
It said: ‘While the broader global economy remains uncertain, the group is well-positioned to capitalise on the ongoing recovery in our key markets and take advantage of the many opportunities ahead.’
AJ Bell investment director Russ Mould expressed surprise at the firm’s forecasts ‘given the difficult backdrop for consumer spending.’
‘Most retailers are being very cautious about their outlook, so it’s welcome turn of events that WH Smith can be upbeat, albeit recognising the uncertain economic outlook.’