WHSmith reports £226m loss & announces store closures

WHSmith reports back on £226m loss after “challenging year”
WHSmith posts heavy loss for the year after impact of coronavirus.
// WHSmith posts pretax loss of £226m after its travel and high street stores are heavily impacted by coronavirus restrictions
// Travel business swung to a loss of £33m after last year’s profit of £117m
// WHSmith said it will look to close around 25 stores

WHSmith on Thursday reported back on its preliminary results for the full year to August 31.

The book and travel retailer made a pretax loss of £226 million, compared with a profit of £135 million in 2019.

On a headline basis, taking out non-cash charges, WHSmith made an underlying pre-tax loss of £69 million, compared to a profit of £115 million the year before.

This was slightly better than analyst expectations of a loss of around £70 to £75 million.

Revenue fell 33 per cent to £1.02 billion after a strong start to the year was dramatically impacted by coronavirus.

READ MORE: WHSmith expected to post loss as Covid dries up travel sales

The group’s high street stores saw a trading loss of £10 million, compared to a profit of £60 million the year before.

WHSmith’s travel arm was heavily impacted by the restrictions on travel amid coronavirus, losing £33 million in the twelve months to the end of August, compared to a profit of £117 million the year before.

Looking ahead, WHSmith said it had taken “decisive actions” to protect colleagues and customers since the start of the pandemic.

The retailer currently has 558 high-street stores and 243 travel stores open, including 206 post offices and 135 hospital stores.

WHSmith added that it expects underlying cash burn for November to be about £20 million.

“Since March, we have been heavily impacted by the pandemic,” chief executive Carl Cowling said on Thursday.

“While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85 per cent of passengers are domestic, is beginning to see some encouraging signs of recovery. In addition, we continue to open new stores in the US and win significant tenders across major US airports,” Cowling added.

The retailer said it had seen a resilient performance for its high street business, and that it is well positioned as the travel markets recover.

“In high street, we had seen a steady recovery and we were well set up both in stores and online as we went into the second lockdown,” Cowling said.

“We have a robust plan across all our businesses focusing on cost management and initiatives within our control which support us in the immediate term and position us well to emerge stronger as our markets recover,” Cowling added.

WHSmith noted that it has 420 leases due for renewal in the next three years, and that it is now looking to close a number of stores once those leases come to an end.

“Depending on the negotiations with our landlords and the Government’s future approach to property rates, we anticipate closing c.25 stores in the current financial year as the leases on these stores expire,” the retailer said.

WHSmith added that it will not be paying a dividend this year.

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