WH Smith travel business performing 'strongly'

Retailer WH Smith said on Wednesday that its travel division continues to perform strongly and that results for the year to the end of August will be in line with expectations.

In an update ahead of its preliminary results, the company said its travel business had seen good sales across all of its channels, with the hospital channel now the second largest in the UK.

WH Smith said gross margin is in line with plan and its new store opening programme is on track in the UK and internationally.

The international business, including recently-acquired InMotion, continues to grow strongly and the group now has 428 stores open outside the UK, it said. It has three InMotion stores outside North America, in Perth, Alicante and Leeds.

"We see good scope to grow InMotion both in the US and internationally. In addition, we see further opportunities to grow our news, books and convenience format in the international travel retail market, where we have a small market share," WH Smith said.

It also said that performance in its High Street business remains in line with expectations.

"Consistent with our profit focused strategy, cost savings and margin improvements have been delivered in line with plan. We continue to focus on our successful stationery business, developing new ranges and allocating additional space to the category in our High Street stores."

At 0810 BST, the shares were up 1% at 2,012p.

RBC Capital Markets said: "We continue to favour WH Smith for its travel growth expansion, which should put upwards pressure on its multiple over time, as it moves closer to higher rated travel pure play peers. Also WH Smith's low basket size, and high margins, means it should offer relatively high earnings visibility.

"WH Smith is trading at circa 16x CY20E price-to-earnings which we consider reasonable versus pure play travel retailers on 16-25x. It also offers a 3% dividend yield and share buyback of up to £50m per year."