WH Smith has slashed its profit forecast for the second time in two months and raised around £106m in fresh equity, as now-ongoing travel disruption and weaker consumer spending hit its airport-led business.

Shares in the travel retailer plunged by almost 20 per cent at one stage on Wednesday, hitting their lowest level in nearly 16 years, after the group warned that passenger numbers and customer spend remained under pressure.

WH Smith, which now focuses on travel locations following the sale of its high street business, said it expects headline profit before tax and non-underlying items to come in between £75m and £90m for the year to August.

That’s down from its previous forecast of £90m to £105m.

The group said the revised guidance reflected “observed and anticipated” declines in passenger numbers, weakening consumer demand, reduced brand marketing, greater promotional activity and inflationary headwinds.

It added that its assumptions were based on no near-term improvement in consumer confidence and the continued availability of jet fuel supplies.

The company suspended its dividend and lowered expectations in April, when it said the Middle East conflict was hitting air travel and spend per passenger.

WH Smith’s North America business has become a particular pressure point. Like-for-like revenue in the division fell one per cent across the 14 weeks to 6 June, with sales down four per cent over the most recent seven-week period.

Within North America air, like-for-like revenue dropped two per cent over the last seven weeks, which the retailer said reflected reduced passenger numbers following air fare inflation and lower airline capacity linked to the Middle East conflict.

Its InMotion business also struggled, with like-for-like revenue down five per cent over the same period, while its resorts arm saw like-for-like sales tumble 11 per cent amid a continued reduction in Las Vegas visitor numbers.

The retailer is now pushing ahead with a restructuring plan. It said 14 uneconomic fashion stores in its resorts business have either closed or now have agreed closure dates, with the remaining 12 fashion stores likely to be exited during the rest of the year.

WH Smith also said it was considering strategic options for its Welcome to Las Vegas business.

In Europe, the group has closed five uneconomic stores in Norway and is in further landlord discussions to either exit or move other stores into a franchise model.

As part of the shake-up, WH Smith expects to take a non-cash impairment charge of up to £150m for the full year, relating to goodwill and store impairments.

The retailer raised fresh funds through the issue of new shares at 410p each, a discount to its previous closing price, as it looks to reduce reliance on debt and give itself more financial flexibility to carry out its turnaround plan.

Executive chair Leo Quinn said WH Smith had “a strong core” and operated in attractive markets, particularly in North America, but admitted the group needed “much greater capital discipline” and a stronger focus on returns.

He said the business was taking action to “sell, exit or renegotiate” loss-making or low-return situations and would replace directly-run operations with franchises in some smaller markets where appropriate.

Quinn added that economic uncertainty and weaker consumer appetite for spending had created headwinds, but said the placing was a “prudent and proactive step” to accelerate the retailer’s transformation.

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