WH Smith’s trading in the run-up to Christmas was “better than anticipated” despite the impact of store closures and reduced footfall across its High Street and Travel division. However, the retailer warned it was currently heading for its worst month since at least September and that it expects to burn up to £20m a month in cash until March.
Sales in its Travel unit over the 20 weeks to 16 January were just 37% of the levels during the same period in 2019 as the pandemic-related travel restrictions continued to impact trading at its stores located in airports and train stations.
However, revenue from WH Smith’s High Street business was relatively strong at 87% of the same period the previous year, with December even higher at 92%. Most of the group’s stores have been able to continue operating during the lockdown with “strong” performances from both its seasonal and new ‘work from home’ ranges.
Its online businesses – funkypigeon.com, cultpens.com and whsmith.co.uk – were also said to have seen record performances and sales “significantly” ahead of the prior year.
WH Smith stated that its recent performance meant cash generation for November and December was ahead of plan, and so it had £340m of available cash and funding facilities at the end of December. Assuming the current conditions continue, the group said it expects underlying monthly cash burn for the period to March to be around £15m-£20m per month – leaving it approximately the same liquidity position as previously flagged.
WH Smith highlighted that it hadn’t used any of the £300m of support it was eligible for through the government’s Covid Corporate Financing Facility (CCFF) but it said the financing facility was being reviewed.
The group also warned that it was heading for its worst month since at least September as the current lockdown and tighter travel restrictions impact both its divisions. In January so far, WH Smith said sales in its High Street stores were 70% lower compared to last year, whilst the Travel outlets had plummeted to just 30%.
“Covid-19 continues to have a significant impact on the WH Smith group, however we are pleased with our performance over the Christmas period which was better than anticipated,” said Chief Executive Carl Cowling.
“We remain well placed to navigate our way through this ongoing period of uncertainty and benefit from the recovery of our key markets in due course.”
NAM Implications:
- Travel sales down 63%, High Street down 13%…
- Cash-burn of £15m to £20m/month to March anticipated to be manageable.
- Keeping the market (and thereby suppliers) informed of the realities, helps…
- But the issue has to be the extent to which travel (commute & tourist) will return to previous levels, ever.
