WH Smith thanks rail and air passengers for sales boost amid high street slump
The retailer’s high street business suffered a 1% decline but airport and station shops saw sales rise 8%.
A jump in passenger numbers bolstered third-quarter sales at WH Smith’s travel arm, helping offset a decline at its high street stores amid broader economic “uncertainty”.
The retailer reported a 4% rise in group sales over the 13 weeks to June 2, while like-for-like sales grew 1%, compared with a year earlier.
Those figures were supported by an 8% rise in its travel business – which accounts for shops based in the likes of railway stations and airports – where like-for-like sales grew 3%.
“This good performance reflects our continued investment in our UK and international businesses and growth in passenger numbers,” the company said, adding that a wider range of healthy food options also proved popular among customers.
It helped make up for a 1% decline in both total and like-for-like sales across its high street business in the third quarter, which the retailer stressed was its “quietest trading period.”
WH Smith also defended the division by noting that gross margins have continued to “improve”, cost savings have been delivered in line with its plans, and that it is continuing to trial new store formats.
WH Smith serves millions of customers each week and continues to grow both internationally and in the UK Chief executive Stephen Clarke
Chief executive Stephen Clarke said: “We have delivered a good sales performance in the third quarter in both our travel and high street businesses.
“Whilst there is some uncertainty in the broader economic environment, WH Smith serves millions of customers each week and continues to grow both internationally and in the UK.
“We continue to focus on profitable growth, cash generation and investing in the business to position us well for the future. We remain confident in the outcome for the full year.”
The company said new store openings are on track for its travel business, having targeted between 15 and 20 new sites in the UK this year.
Across its international business, WH Smith said it was set to open eight units in Madrid Airport, bringing the total number of international sites to 282.
A further 10 locations are due to open this year at the global division.
WH Smith shares were the best performers on the FTSE 250 and hitting a four-month high after rising as much as 6.5% in morning trading.
Analysts said investors were optimistic given the more muted drop in sales at its high street arm.
George Salmon, an equity analyst at Hargreaves Lansdown, said: “The ongoing headwind of lower footfall means the High Street business has seen sales drop again, but the pace of decline is notably slower than reported earlier in the year.
“We suspect the royal wedding and warm weather are contributing factors, but even if we look past these short-term boosts, it’s impressive how the group’s cost-cutting measures mean rising profit margins are offsetting lower revenues.”