As it prepares to complete the sale of its struggling High Street division, WH Smith has reported another strong period for its Travel unit.
The business saw revenues climb 7% on a constant currency basis over the 13 weeks to 31 May.
Revenue in the UK increased 5%, with like-for-like sales up 6%. Looking at specific channels, like-for-likes rose 7% in airports, 3% in hospitals, and 6% in rail stations.
Total revenue in WH Smith’s North America division rose 7%, with like-for-likes increasing 2% due to strong growth in passenger spend and range improvements.
Meanwhile, total revenue in the rest of the world increased by 12% and by 7% on a like-for-like basis as passenger numbers continued to improve.
Looking ahead, the group said it is well-positioned for the peak summer trading period as a pure-play travel retailer and is on track to deliver the full year in line with expectations.
It added: “While we are mindful of the broader economic and geopolitical uncertainty, the group is well positioned as we enter our peak summer trading period.
“We are strengthening our focus on cost and cash discipline, and we are in a strong position to capitalise on substantial value-creating opportunities that exist across our markets.”
WH Smith also confirmed that it is on track to sell its High Street division to the private equity firm Modella Capital by the end of the month.
The £76m deal will see the WH Smith name disappear from British high streets and be replaced by the TG Jones brand.
Tash Van Boxel, retail analyst at GlobalData, said yesterday: “WH Smith’s pivot to focus solely on its travel division is a smart move, with the sale of its high street arm due to complete at the end of June, meaning that group revenue performance will no longer be weighed down by this fascia.”
She also noted that the strong performance of its UK Travel division highlights the positive response towards new one-stop-shop formats that WH Smith is implementing via refurbishments. “Improving the food & grocery offer will have been a significant reason for this, as consumers indulge in the Smith’s Family Kitchen food ranges in-store and in cafés,” said Van Boxel.
“WH Smith must introduce its café to more travel hubs, following its trial in a hospital and airport, to stand out from key airport competitor Boots, and to further support retail sales in these locations. Hospitals should be prioritised for the café roll outs, as these locations house a less diverse selection of cafés and restaurants compared to travel hubs.”
NAM Implications:
- WH Smith is performing well, other than High Street fronts.
- Endorses the decision to sell off the division that is diluting group performance.
- (Raising the question of whether new owners can do better than a retailer with years of experience in the category…)
