Overall trading has continued to fall at high street retailer WHSmith during its second half, even at its usually strong travel stores.
According to trading figures released today, its total sales declined one per cent and like-for-like (LFL) sales fell four per cent year-on-year in the 18 weeks to July 2nd 2011.
Travel outlets - shops based in train stations and airports - saw sales rise two per cent in total but decrease two per cent LFL despite having soft year-on-year comparisons due to disruptions caused to air travel by the Icelandic ash cloud in 2010.
Whilst trading continues to struggle, WHSmith claims that during the period gross margins have been improving and cost savings have been delivered in line with expectations.
A statement from the retailer read: “We confirm that our financial position is in line with market expectations and our balance sheet remains strong.
“We continue to generate high levels of cash from our operations. As of July 1st 2011, we have purchased 9.4 million shares and returned to shareholders £44.9 million of the £50 million share buyback announced in October 2010.”
In a first-half trading update released in April, WHSmith posted a larger drop in LFL, down five per cent, and still reported a three per cent rise in profits.
The retailer, under the management of Kate Swann, has become particularly adept at cutting costs and boosting profits in difficult trading circumstances, as its core segment of books and magazines is increasingly undermined by online competitors.
An acknowledgement of the continued difficulties in the market matched with quiet optimism in its full-year performance reveals the business is secure for now but more evolution of the brand looks necessary.
A report from retail analysts at Espirito Santo this morning said: “Short term, we think that WHSmith can continue at least a stable EBIT stream from the high street as weaker competition continues to struggle and management continues to pull gross margin and cost levers.
“We acknowledge that these measures are finite. Longer term, there may be a need to rationalise the store portfolio, but we think that the current team at least is likely to have the foresight to start doing this before it is too late.”