WH Smith revenues boosted by travel segment

WH Smith posted a jump in interim revenue on Thursday thanks to a strong performance from its travel division, but profit was dented by costs related to the acquisition of US airport retailer InMotion.

In the six months to 28 February 2019, total revenue rose 8% to £695m, with like-for-like revenue up 1%.

Total revenue in the travel segment was up 18% or 3% on a LFL basis, with trading profit 7% higher at £44m. In the high street division, however, total revenue fell 1% and LFL revenue was 2% weaker, as trading profit declined 4% to £48m.

Headline profit before tax was 1% lower during the period at £81m and statutory profit before tax slid 21% to £65m. Non-underlying costs relating to the acquisition of InMotion were £9m.

The group lifted its interim dividend per share by 8% to 17.2p.

Chief executive Stephen Clarke said: "The group has delivered a strong performance in the first half of the financial year.

"The integration of InMotion is progressing well. This acquisition doubles the size of our business outside of the UK where we are now present in 99 airports and 30 countries. We won a further 21 units in the period, including two InMotion units in Australia and Spain, highlighting the potential of this business outside of the US.

"While there is uncertainty in the broader economic and political environment, we have made a good start to the second half of the financial year and the increase in the interim dividend by 8% reflects the board's confidence in the outcome for the full year."

At 0930 BST, the shares were down 0.3% at 2,132p.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "One statistic from WH Smith’s latest results which sums up the state of UK retail is that its high street sales falling by 2% ranks as the second best trading performance in ten years. Enough said.

"It’s a good job then that WH Smith has been canny enough to pivot away from the UK high street, and focus on travel locations such as airports and railway stations. Sales are growing nicely in this side of the business, helped by an expanding store network, which has now taken a step up with the acquisition of the US airport retailer InMotion.

"The travel business now generates over 70% of WH Smith’s annual operating profit, and with the newsagent looking to spread its wings internationally, it’s only heading in one direction. This puts WH Smith in a better position than its staid high street format might suggest. Bright expectations are already baked into the share price though, as WH Smith commands a significant valuation premium to its peers."