WH Smith sees FY results at top end of expectations

WH Smith on Wednesday said it expected annual results to be at the upper end of expectations as it reported a surge in revenue over pre-Covid pandemic levels for the first time, driven by a recovery in the travel market.

The newsagent, which runs stores on the high street as well as train stations and airports, said sales in the 15 weeks to June 11 were up 107% on the same period in 2019, with its travel division surging by 123%.

“We remain in a strong position to benefit from the significant growth opportunities across the global travel retail market and currently have over 125 stores won and yet to open. In addition, there are a large number of ongoing tenders across our markets,” WH Smith said in a trading update.

It added that its UK business was performing strongly as passenger numbers recover, driven by its ongoing focus to enhance its ranges and categories, such as health and beauty and technology.

“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,” the company said.

“Travel continues to perform strongly across all three divisions and we expect this to be maintained into the peak summer trading period. As a result, we now anticipate the full year outturn to be at the higher end of analysts' expectations.”

Russ Mould, investment director at financial platform AJ Bell, said to some people "it’s a great mystery how WH Smith continues to grow earnings at quite a clip".

"Messy stores, overpriced sweets, newspapers stored in fridges and useless trinkets that collect dust on the shelves seem to point toward a firm going in the wrong direction," he said.

“Despite all this, time after time its trading updates and results show that customers see through the chaos and are happy to keep spending in its stores.

“The current UK airport chaos works both ways for the company. On one hand, if your flight is cancelled then WH Smith loses out on potential business. On the other, if you’re already in the airport and find out you’ve been switched to a different flight later in the day, you might be stuck and find yourself filling up on Sudoku puzzle books, £8 Toblerone bars and £3 bottles of fruit juice."

“The fact that WH Smith believes its full year results will be at the higher end of expectations comes as surprise 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.”