WH Smith shrugs off falling sales
Retailer WH Smith promised a £50 million return for shareholders today after cost cuts helped it to a 6% rise in annual profits.
The chain, which has around 1,200 UK stores, shrugged off falling sales in its high street and travel outlets to grow profits to £108 million in the year to the end of August from £102 million a year earlier.
Chief executive Steve Clarke, who took over from long-time boss Kate Swann in the summer, said it had been a strong performance in a tough trading environment.
He announced the return of another £50 million to shareholders through a share buyback, while the dividend for the year increased by 14%.
The company, whose shares rose by 8% today, will have handed £330 million to shareholders since 2008 through buybacks and a special dividend.
Today's figures are more evidence of WH Smith's strategy of putting profits over sales growth, although City analysts remain concerned about how long it will be able to continue squeezing costs.
Like-for-like sales in its 615 high street stores slumped 6% but profits were 4% higher to £56 million.
It slashed £18 million of costs from its high street network during the year with initiatives such as less power-hungry tills and voice-activated stock picking in its warehouses. WH Smith is targeting another £22 million of savings over the next three years.
The chain has weathered the downturn with the help of "impulse" offers such as a free bottle of water with the Telegraph newspaper, while shifting its focus away from lower-margin CDs and DVDs towards books and stationery.
Its 673 travel units located at airports, railway stations and motorway service stations saw a 4% fall in underlying sales but grew profits 5% to £66 million. It said the travel network is "well positioned for recovery when the economy improves".
WH Smith is increasingly adding travel outlets abroad, with a total of 141 either open or due to launch abroad, on top of 579 units in the UK.
The chain's revenues dropped to £1.19 billion from £1.24 billion a year earlier, as new travel store openings failed to offset sliding underlying takings.
Mr Clarke said: "We continue to plan cautiously in an uncertain environment, however we are a resilient business and are well positioned for continued growth in both the UK and internationally."