WH Smith upgrades profit forecast after travel sector performs well
Retailer WH Smith has upgraded its full year profit forecast after hailing another strong performance at its travel arm over the festive period.
The firm said like-for-like sales at its travel arm, which includes stores at airports and railway stations, rose 5% in the 21 weeks to January 21.
This offset a 3% fall in comparable sales across high street stores and left overall group sales up 2% and 1% on a like-for-like basis.
Chief executive Stephen Clarke said: "In travel, we have delivered good sales growth across all our key channels in the period.
"This was driven by ongoing investment in the business and continued growth in passenger numbers - particularly in our airport stores over the Christmas holiday period.
"As a result of the performance in travel we expect group profit growth for the year to be slightly ahead of plan."
The company has been boosted by surging demand for food on the go across its stores based in airports and railway stations.
The dip in high street sales was explained by strong promotional activity and tough comparatives from last year when it saw strong sales of "colour therapy" titles.
Nevertheless, Mr Clarke described high street figures as a "good performance" and in line with expectations, pointing to strong sales of spoof humour books.
He added: "While there is some uncertainty in the broader economic environment, we remain confident that the Group is well positioned for the year ahead as we continue to focus on profitable growth, cash generation and investing in new opportunities."
Total travel sales rose 10% while high street sales dipped 4% over the period.
Shares rose over 7% in morning trading to 1,586p.
WH Smith also said that it has agreed a new five-year £140 million revolving credit facility provided by Barclays, BNP Paribas, HSBC and Santander.
George Salmon, equity analyst at Hargreaves Lansdown, said: "Growth in passenger numbers, together with the results of its ongoing investment programme, have fuelled a solid performance from WH Smith's stores in transport hubs. This has helped group profit expectations for the full year rise.
"High street sales have had a tough time in recent years, so a decline here was always to be expected, especially so given the boost from adult colouring books has now largely faded away."