// WHSmith to expand travel division with 100 new shops
// The retailer secured £325m in financing to fund its growth plans
// WHSmith expects sales to recover to 2019 levels within next 2 to 3 years
WHSmith has set out plans to expand its travel business with the opening of 100 new shops despite the losses it has suffered due to the Covid-19 pandemic.
The retailer secured £325 million in financing to fund its growth plan, in the form of convertible bonds, as well as a £250 million credit facility from its banks which will mature in 2025.
Some of the proceeds of convertible bond will be used to refinance £400 million of existing bonds that are due for redemption in 2023, with £50 million earmarked to fund the opening of roughly 100 new stores in travel locations, such as airports and train stations, where it has already won competitive tenders.
It said it has a pipeline of 68 stores to open in the US, with the remaining travel stores set to open across the UK, Australia and the rest of Europe.
WHSmith generated more than half of sales and profits from its stores in airports, train stations, hospitals and motorway service areas before the pandemic struck.
It expects sales to recover to 2019 levels within the next two to three years.
The plans come after WHSmith reported a pre-tax loss of £38 million for its half-year to February, sliding from a £63 million profit in the same period last year.
Overall sales dropped by 44 per cent to £420 million, driven by a 65 per cent sales plunge to £150 million across its travel stores.
Meanwhile, its high street retail business, which has been impacted by lower footfall, saw a more modest 14 per cent decline in revenues to £270 million.
Overall travel revenue so far during the third quarter was 43 per cent of pre-pandemic levels, up from 34 per cent in the second quarter.
The high street stalwart also reported “encouraging signs of growth”, especially in the key US aviation market, where domestic travellers not subject to international travel restrictions represent four-fifths of the total.
“In travel, while many of our stores have remained closed, it is a credit to the team that we have kept up the momentum, focusing on our plan to increase average transaction value and spend per passenger while continuing to win new business,” WHSmith group chief executive Carl Cowling said.
“As a result, we are now operationally stronger than prior to the pandemic.”
He added: “We’ve just spent a lot of time negotiating our way out of minimum annual guarantees. Our rents will grow in line with our sales.
“Our average transaction value is a lot less and a lot of what we sell is not rated for VAT anyway.”