WH Smith sales boosted by recovery in travel over the Christmas period but UK footfall held back by rail strikes
- Turnover at the retailer shot up by 41% in the 20 weeks ending 14 January
- Sales at the company’s UK railway outlets have been hit by recent strikes
- WH Smith has launched 40 new stores since the beginning of September
WH Smith has hailed an impressive start to the financial year as the bounce back in travel over the festive period provided a windfall for the group’s outlets.
Turnover shot up by 41 per cent in the 20 weeks ending 14 January, compared to last year when trading was severely affected by the reimposition of Covid-19 restrictions in response to the Omicron variant’s emergence.
Loosening lockdown rules and skyrocketing airport sales helped revenue in the firm’s UK travel arm climb by 70 per cent, as did robust performances at its hospital stores and technology accessories brand InMotion.
Recovery: Loosening lockdown rules and skyrocketing airport sales helped revenue in WH Smith’s UK travel arm climb by 70 per cent in the 20 weeks ending 14 January
During the same period, travel sales grew by almost a third in North America, while they nearly tripled across the rest of the world as the company opened new sites in cities like Brussels, Belgium and Malaysia’s capital Kuala Lumpur.
Total revenue was also 20 per cent higher on 2019 levels, although slightly down on a like-for-like basis, as airline and rail passenger numbers remained significantly below pre-pandemic volumes.
Widespread flight cancellations and delays have stifled the recovery at the group’s airport locations, especially in the UK and Europe, as labour shortages have left airlines struggling to cope with the resurgence in travellers.
Concurrently, footfall at prominent British commuter rail hubs has been impacted by the pandemic-induced rise in people working from home and a series of strikes regarding pay and conditions by railway staff.
Nonetheless, WH Smith said global passenger volumes are continuing to rebound even against a backdrop of heightened economic uncertainty.
Having launched 40 new travel stores since the beginning of September, it has won bids to open over 130 more outlets, including at the airports of Reagan National in Washington D.C. and Palm Springs in California.
Chief executive Carl Cowling said the firm was ‘in its strongest ever position as a global travel retailer,’ following the impressive results and gaining of new tenders.
He further remarked: ‘This strength, combined with the ongoing improvement in passenger numbers across the globe, means that we are confident of another year of significant growth in 2023.’
Back in November, WH Smith reinstated its dividend after revealing that its annual profits had marginally eclipsed forecasts, having halted shareholder payouts two years previously when it was forced to shut most of its venues at the outbreak of the pandemic.
As trading curbs were loosened, demand recovered more quickly at the company’s high street business, partly due to surging sales at its online brands, such as greeting cards seller funkypigeon.com.
The division was also allowed to keep many of its shops open during the strictest lockdown stages because they hosted Post Offices, which were considered an essential service by the UK Government.
In the most recent reporting period, though, the high street arm’s like-for-like sales flatlined and remained 10 per cent below pre-pandemic levels.
Russ Mould, investment director at AJ Bell, said: ‘For years, the UK high street operation has been something of an afterthought, run as efficiently as possible with a firm control on costs.’
He added: ‘At some point, a debate over the role of the high street arm in the wider group may start to heat up, and investors may look for a sale or spin-off of a business which has very different growth prospects.’
WH Smith shares closed 2.9 per cent lower at £15.70 on Wednesday, although their value has still increased by around a third in the past three months.