Shares in WH Smith dropped on Wednesday despite the retailer reporting strong first-half trading within its Travel division.
At 922.5p per share, the FTSE 250 business was last dealing 3% lower in midweek trade.
Ongoing strength at Travel meant group revenues rose 3% in the six months to 28 February, to £951 million. Growth was 4% on a constant currencies basis.
Sales at its core division – which has stores in airports, rail stations and other transport hubs in 32 countries – rose 6% to £712 million, or 8% at stable currencies.
Meanwhile, High Street revenues dipped 7% to £239 million.
Trading profit at Travel rose 12% year on year, to £56 million, but across its High Street stores this plummeted 32% to £15 million.
As a consequence, group trading profit dipped to £71 million from £72 million previously. Stripping out one-off items, profit before tax also dipped by £1 million, to £45 million.
The interim dividend rose to 11.3p per share from 11p last time out.
Going Places
Sales at WH Smith’s UK travel stores rose 7% in the first half, while in the US revenues were up 3%. Sales in its other international stores increased 11%.
The retailer generated just over half (54%) of revenues from its UK travel outlets in the first half. International expansion is front and centre of its growth plans, and it cut the ribbon on 26 new North America stores in the first half.
WH Smith plans to open 60 new stores globally this year, which will leave it with 10 net new stores after the planned closure of some 50 underperforming sites.
Its new outlet pipeline comprises of some 90 bases, of which 70 are in North America.
“Good First Half”
Chief executive Carl Cowling commented that “the group has had a good first half with consistent like-for-like growth across all our Travel businesses, and we are well-positioned for the peak summer trading period.”
He said that WH Smith’s second half had “started well,” noting that “we remain on track to deliver full year results in line with market expectations.”
Cowling added that “we are mindful of the increased level of geopolitical and economic uncertainty, however given the resilient nature of our business, we are well-positioned to benefit from the growth opportunities in global travel retail.”
Solid Progress
Russell Pointon, analyst at Edison, commented that WH Smith’s interims “reflect continued momentum in global travel retail, supported by recovering passenger volumes and structural shifts in consumer behaviour at transport hubs.”
He added that “the strength of the Travel division highlights the company’s strategic alignment with long-term trends in international mobility and airport infrastructure investment.”
The FTSE 250 firm found a buyer for its beleaguered High Street unit last month after putting it on the chopping block in January. Its 480 stores will be acquired by Modella Capital for £76 million as WH Smith continues its pivot towards travel hubs.
Pointon said that “looking ahead, [key areas] include progress in executing the North American growth strategy, the scalability of the one-stop-shop format across geographies, and the group’s ability to maintain margins and cash generation against a tricky geopolitical background.”
He noted that rising concerns over potential recession could impact travel demand, while adverse currency movements may also remain an issue for the company.
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