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WHSmith PBT jumps 5% to £69m in half year

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Variety retailer WHSmith has seen group pre-tax profit climb five per cent to £69 million despite a four per cent decline in group total sales.

As like-for-like (LFL) sales decreased five per cent in the six months ended February 28th 2013, the retailer’s high street division saw profits rise two per cent to £48 million and delivered cost savings of £9 million, with an additional £8 million identified for the second half.

However, high street total sales fell six per cent over the period and were down five per cent on a LFL basis, “reflecting the current economic climate”, the retailer said, while WHSmith’s travel division reported flat total sales as LFLs declined four per cent.

Despite this, the travel arm continues to expand internationally with 121 units now open or won while a further 30 kiosks were won in China as well as the 12 new UK units opened during the period.

WHSmith’s stationery division also saw a fall in LFLs, down two per cent on a year earlier though the retailer remains confident of building on its market leading position, while LFL sales of books and news & impulse dropped six per cent and four per cent respectively.

Outgoing Group CEO Kate Swann, who is to stand down in June as high street Managing Director Steve Clarke takes over, noted that, despite challenges, WHSmith has returned £28 million to its shareholders via its share buyback announced last August.

“We have delivered another strong performance across the Group with earnings per share up 11 per cent and the interim dividend increased by 13 per cent.

“Both businesses continue to increase profit year on year, despite the challenging economic environment.

“The Group remains highly cash generative enabling us to invest in our businesses and in new opportunities, whilst returning cash to shareholders.”

Swann also welcomed new Non-Executive Chairman Henry Staunton to his new role, which will commence on September 1st 2013, after the retirement of current Chairman Walker Boyd.

Swann commented: “The Board and I are delighted that Henry Staunton has agreed to become Chairman of WHSmith.

“Henry has extensive finance and retail expertise together with a strong and varied experience as a non-executive director which will serve the Company and its shareholders well.

“On behalf of the Board I would like to thank Walker for his contribution to WHSmith and he leaves with our best wishes for the future.”

After nearly a decade at the retailer, Swann’s strong commitment to cost control has helped turnaround its fortunes in a tough climate and experts have warned that WHSmith must work hard to maintain its position.

Dan Coen, Director at advisory and restructuring firm Zolfo Cooper noted: “WHSmith’s results are a triumph for Kate Swann.

“Swann’s cost-cutting methods of steering clear of the entertainment market and focusing on more profitable products, has led the retailer to stellar success.

“Other retailers on the high street need to sit up and take note of the stationer’s successful strategy.

“WHSmith has continued to recognise how the market is moving as well as how consumers like to shop by streamlining its product offering and store portfolio.

“With Steve Clarke due to take over this June, WHSmith will need to maintain its performance keep afloat in the rising tide of multi-channel, supermarket and convenience store competitors.”

Published on Sunday 14 April by Editorial Assistant

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