Trading levels at high street retailer WHSmith declined further during the last quarter, but results released today also show that the business continues to improve its profitability.
Total sales across its operations fell one per cent in the 15 weeks to June 9th 2012, and on a like-for-like (LFL) basis sales dropped three per cent over the period year-on-year.
In a familiar story for the stationery, newspaper & magazine specialist, although trading declined over Q3, margins improved across all of its division to help the business remain highly cash generative.
While slightly reducing its store numbers on the British high street, WHSmith has also been increasing its travel store numbers at transport locations, and which helped the division post a one per cent total sales increase despite an underlying trading decline of three per cent in the period.
High street outlets performed worse then the travel stores, as has been the case for some time, with LFLs down four per cent compared to the same period last year.
Joseph Robinson, Senior Consultant at analyst group Conlumino, said that the results show that WHSmith continues to effectively cut costs, but despite recently announcing a plan to introduce Kobo concessions in some stores, Robinson worries that the retailer is not investing enough in the future.
“All in all though, it‘s very much the same old story,” Robinson commented.
“The business looks ideally placed to deliver continued steady profit growth in the short term – having previously identified a further £3 million worth of cost savings in its high street operations for the second half.
“However, in the longer term, opportunities for cost savings will eventually plateau and the business will require serious investment, not least in its store portfolio.”
WHSmith also announced today that as of June 13th it had purchased 6.8 million shares and returned to shareholders £36 million of the £50 million share buyback announced in August 2011.