WHSmith warns on future profit uncertainty despite improving trends

WHSmith has said it has been encouraged by improving trends in its performance despite the impact of Covid-19
"The trajectory of the recovery in travel remains uncertain." : WHSmith.
// WHSmith has said it has been encouraged by improving trends in its performance despite the impact of Covid-19
// Travel retail sales as a whole are still less than half of what they were pre-pandemic

WHSmith said it expects the outcome for the year to August 31, 2021 to be ahead of expectation after an uptick in high street and travel trading, but warned ongoing uncertainty could impact profits in future.

In a trading update ahead of reporting its full year results in November, the book and stationery retailer said total revenue at its high street business in the eight weeks to 28 August came in at 84 per cent of 2019 levels.

WHSmith said its strategy within its travel business is to focus on customer conversion and increasing average transaction value.


READ MORE: WHSmith to open 18 new tech stores at “significant” UK airports


While UK passenger numbers remain significantly down versus 2019 levels, the retailer said it saw a gradual recovery in sales as restrictions eased throughout July and August, with revenue reaching 64 per cent of the 2019 level.

This meant that group sales were 71 per cent of what they were in the corresponding period two years ago.

WHSmith also gave trading updates for the 8 weeks to August 28, with the retailer’s travelling arm reporting 64 per cent of pre-pandemic sales.

Total group sales for the period stood at 60 per cent of pre pandemic levels in the first half of the period, 65 per cent in the second half and 71 per cent in the 8 weeks to August 28.

The retailer has also broken down its travel sales numbers, highlighting the ongoing struggles the aviation industry has had amid the pandemic.

WHSmith managed just 16 per cent of pre-pandemic sales in the first half and 17 per cent  of sales in the second in airports during the period.

This figure has recovered to just 30 per cent by August 28.

Other travel locations have performed much stronger as sales at train stations reached 59 per cent of pre-pandemic levels in the eight weeks to August 28, while hospitals were back to 85 per cent of 2019 revenues.

Travel retail sales as a whole are still less than half of what they were pre-pandemic, having reached just 48 per cent of 2019 revenues by the end of August 28.

Outside of the UK, the retailer’s North America business performed well in the two-month period with sales at 93 per cent compared to 2019 levels.

WH Smith said it now expects the outcome for the year to August 31 to be slightly ahead of expectations outlined on July 8 and said it remains confident that revenues will return to pre-Covid levels in the next two to three years.

The retailer added: “While there will be a return to good levels of profitability in the year ending August 2022, the trajectory of the recovery in travel remains uncertain. This combined with the previously announced accounting finance charges relating to the successful convertible bond issue on April 29, means that we currently anticipate the levels of profitability for the year ending August 2022 will be at the lower end of market expectations.”

Click here to sign up to Retail Gazette’s free daily email newsletter

LEAVE A REPLY

Please enter your comment!
Please enter your name here