// WHSmith believes the coronavirus outbreak could knock up to £130m off its full year revenues
// It also warned that the outbreak could impact underlying pre-tax profits by between £30m-£40m
// WHSmith says Covid-19 is impacting its Asia Pacific travel business, as well as airport sites in the UK, the US and Europe
WHSmith said it believes the Covid-19 outbreak could knock up to £130 million off its revenues for the current financial year.
The books and stationery retailer said it was also predicting that the outbreak will impact upon underlying pre-tax profits by between £30 million and £40 million for the year to August 2020.
WHSmith said the virus has had a “significant impact” on its Asia Pacific travel business, as well as a “material reduction in passenger numbers” at airport sites in the UK, US and Europe.
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The update came as WHSmith reported that its fast-growing travel business helped offset high street decline to drive the group to sales growth over the past six months.
It believes Covid-19 will result in a “reduction in our expectations for revenue and profit across the travel business for the second half”, on the basis of a “challenging” third quarter and “modest normalisation” in the fourth quarter.
The retailer said revenues for its UK travel business are predicted to fall 15 per cent below forecasts for the next six months, with a 35 per cent decline in March and April.
It said it predicts sales in the US division and rest of its international business to fall 20 per cent below forecasts for the half-year.
WHSmith also recognised that the virus “could result in reduced high street footfall”, but said it has not yet seen a significant impact on the high street arm.
The heritage retailer reported that group total revenue increased by seven per cent in the six months to February 29, with like-for-like revenues down one per cent.
It said this was driven by its travel business, which saw sales increase by 19 per cent with like-for-like sales growth of two per cent
Meanwhile, its high street business saw revenues fall five per cent with like-for-like revenues down four per cent.
In a trading update, the retailer said: “WHSmith is a resilient business with a strong balance sheet, substantial cash liquidity and strong cashflow.
“The group has a strong management team in place and has consistently demonstrated that it can adapt and respond quickly to changing market conditions.
“Over the longer term, the board remains confident in the strategy and believes the group is well positioned to benefit from the normalisation and growth of the global travel market.”
with PA Wires
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