Interactive Investor

ii view: WH Smith sales rise but shares still slump 7%

Store openings overseas continue with North America the key focus. We assess prospects.

6th September 2023 11:20

by Keith Bowman from interactive investor

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Full-year trading update to 31 August

  • Travel related revenue up 42%
  • High Street related revenue down 1%
  • Total group revenue up 28%

ii round-up:

Specialist retailer WH Smith (LSE:SMWH) today flagged expectations for full-year profit to be in line with current City forecasts, as it detailed a continued normalisation in travel related sales following the pandemic. 

Same store travel sales at airports and railway stations slowed to a gain of 15% in the second half of the year ended August, down from 48% in the first half, where performance was buoyed by an easy comparative given Covid travel restrictions the year before. 

Shares in the FTSE 250 company fell as much as 7% in UK trading, having come into this latest news little changed year-to-date. That’s similar to shares of rival convenience food seller Greggs (LSE:GRG), although pandemic beneficiary Just Eat NV (LSE:JET) is down more than a third. The FTSE 250 index itself is down 2% year-to-date.   

Overall, WH Smith sales during the year were 28% higher than in 2022, with growth in travel related sales of 42% more than offsetting a 1% decline at its UK high street outlets. 

The Swindon headquartered company’s push to become a global travel retailer continued as it opened 43 new stores in North America and a further 30 across the rest of the world, mainly in Europe. 

It plans to open a further 80 travel stores in the year ahead, with half in North America, 25 across the rest of the world and the balance of 15 in the UK. 

Annual results are scheduled for 9 November.

ii view:

A retailer of newspapers, books, and other convenience products such as sandwiches and drinks, WH Smith operates more than 1,700 stores and a series of websites. Most of its outlets are now travel related, located at airports and railway stations across the UK and overseas, with just over 500 stores in its UK high street division. 

Other group brands include its InMotion branded technology related stores, often sat aside its travel stores at airports both in the UK and internationally, and its online stores and Cult Pens. 

For investors, the challenging economic backdrop including a cost-of-living crisis for consumers globally should not be ignored. Technological advances now offer alternatives to travel such as zoom meetings, with newspapers now available online. Costs generally for businesses remain elevated, the retailing of books remains highly competitive with Amazon a core player, while currency headwinds warrant consideration given its growing overseas operations. 

More favourably, a new store opening programme is ongoing including for its InMotion technology chain. Its diversity of both product type and geographical location is not to be overlooked. Costs and its product categories remain a management focus, while the dividend payment was previously restarted following its suspension during the pandemic, with the shares now offering a forecast dividend yield of almost 2%. 

In all, and with its store opening programme ongoing and consensus analyst estimate of fair value at over £19 per share, the retailer remains a stock of interest. 


Product and geographical diversity

Growing store numbers


Uncertain economic outlook

Overseas ops bring currency volatility 

The average rating of stock market analysts:


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