WH Smith lifts FY expectations thanks to better NA performance

WH Smith said on Thursday that sales are gradually recovering as Covid restrictions ease as it upgraded its full-year expectations thanks to an improved performance in North America and announced the acquisition of several former Dixons stores.

In the 18 weeks to 3 July, UK travel revenue was 32% of the 2019 level. By channel in the UK, air was 10%, hospitals were 80% and rail was 34% compared to 2019 levels. In the week to 3 July, total UK travel revenue was 38% versus two years ago.

"In Europe, where travel restrictions have been eased in recent weeks, we are seeing a gradual improvement as passenger numbers begin to recover," the retailer said. "Outside of North America and Europe, our international business is seeing broadly similar trends to UK air, with passenger numbers significantly down versus 2019.

"As we have done in the UK, we continue to focus on increasing average transaction value and we are well positioned to benefit from the growth opportunities that exist both in the news, books and convenience category as well as in tech accessories."

The company said its North American business has continued its "encouraging recovery", with total revenue during the 18-week period at 74% of 2019 levels. More recent sales in June were at 88% of 2019 levels.

WH Smith also said that its resorts channel, mainly based in Las Vegas, has seen a significant improvement in recent weeks, as visitor numbers continue to recover. In May, visitors were down 22% versus the same month in 2019, with all Covid-related restrictions lifted in Las Vegas from 1 June. As a result, the NA business is trading ahead of expectations.

"Following the stronger than anticipated performance from our North America business, we anticipate a small improvement to management's expectations for the current financial year," WH Smith said.

The company also said on Thursday that it has bought several former Dixons stores. WH Smith said it had "successfully won" 18 technology and accessories stores across a number of significant UK airports, including London Heathrow, London Stansted, Manchester, London Luton, Birmingham and East Midlands. The stores will trade under the InMotion brand.

In a fully recovered travel environment, the group expects the stores to deliver sales of around £60m a year.