Strong cost cutting across its operations has enabled WHSmith to report a four per cent rise in profit before tax (PBT) for its full-year financial period, a results statement revealed today.
Difficult sales results, especially on the high street, meant group sales declined five per cent year-on-year on a like-for-like (LFL) basis in the 12-month period but the variety retailer has long anticipated trading difficulty and through efficiencies recorded a PBT of £93 million.
It targeted savings of £11 million in its high street operation for the 12 months ending August 31st 2011 but managed to exceed this by £3 million and claims to have identified another £11 million worth of cuts to be achieved in the next three years.
Gross margin for the group improved by 150 basis points in the year compared to 2010, with net cash totalling £41 million and earnings per share up 12 per cent to 51.4p.
Kate Swann, Group CEO for WHSmith, said: “We have delivered a good performance across the group, despite a challenging trading environment, with further profit growth from High Street and record profit in Travel.
“We have seen another year of strong cash generation from both businesses and this is reflected in a 16 per cent increase in the full-year dividend and a further return of cash to shareholders.”
High street sales dipped six per cent LFL in the period and its usually more resilient travel stores, located at train stations and airports, saw LFLs fall three per cent, but the retailer expanded space and opened stores in both sectors.
Although the high street represents nearly double the revenue of travel for WHSmith, the latter is becoming more important to the group with 60 more stores planned for next year including 25 in international locations.
By reducing its entertainment product line and concentrating on its core offer, Swann feels confident that the business is well placed to continue profitability during the current downturn.
Swann said: “The economic conditions remain challenging, however we have planned accordingly. We are a resilient business with a strong and consistent record of both profit growth and cash generation and have opportunities for growth in both the UK and internationally.”