Wednesday, January 23, 2019

WHSmith sees “good profit performance” as LFLs fall


Variety retailer WHSmith saw total sales fall four per cent in the 20 weeks to January 20th 2013 though a trading statement from the group today said that it had “delivered a good profit performance in the period”.

Although like-for-like (LFL) sales dipped five per cent, the retailer noted that margin had been well managed and its costs tightly controlled.

In WHSmith‘s high street division, both total sales and LFLs were down five per cent on the same period last year though its margin improved in line with its strategy, it said.

The travel arm of the business also witnessed a decline as total sales remained flat while LFLs decreased four per cent over the period.

New store development remains a priority however and the retailer said that it has identified new opportunities for UK and international growth.

Last August, the retailer announced its intention to return up to £50 million of cash to shareholders via a share buyback programme and yesterday it purchased 2.48 million shares at an average price of £6.38.

WHSmith‘s CEO Kate Swann, who is set to leave her position in June and be succeeded by the high street business‘ Managing Director Steve Clarke, noted that the group remains highly cash generative.

“During the period we saw a good profit performance across the Group,” she said.

“Margin was well managed and costs were tightly controlled throughout the business.

“Looking ahead, we expect the trading environment to remain challenging however we are a resilient business with a consistent record of both profit growth and cash generation, and are confident in making further progress in the year.”

Swann‘s upcoming departure will prove challenging for the retailer, experts have warned and Neil Saunders, Managing Director at analyst firm Conlumino, said that, despite “unrefined” customer service and “shabby” store appearances, Swann is to be applauded for her efforts in turning the group around.

“If there is a sense of déjà vu in WHSmith‘s results it is because the familiar story of profits up, sales down is a pattern that has now repeated itself for many years,” Saunders commented.

“This dynamic is not without its advantages and credit does need to be given to Kate Swann‘s careful financial management.

“Without it, and without her foresight in moving out of categories such as entertainment, Smiths could be facing the type of fate that others on the high street have recently gone through.

“Indeed, it would not be unfair to paint Ms Sawnn as being the saviour of WHSmith.”