WH Smith now expects its annual trading figures to come in at the top end of expectations after benefitting from the resumption of international travel, which has driven sales beyond pre-pandemic levels for the first time.
In a third-quarter trading update covering the 15-week period to 11 June, the retailer revealed that its total revenues were now 107% of those recorded in 2019.
After seeing a bounce back in trade at stores located in airports in the UK and North America, the group’s Travel division is now ahead by 123%.
WH Smith noted that it was in a strong position to benefit from the significant growth opportunities across the global travel retail market and currently has over 125 stores won and yet to open. In addition, there are a “large number” of ongoing tenders across its markets.
Meanwhile, revenue at the retailer’s UK High Street division is still only 79% of pre-pandemic levels, partly impacted by a recent cyber attack incident on its Funky Pigeon website. The group stated that it had seen good sales of Platinum Jubilee ranges and a focus on front-of-store ‘mega deals’ was delivering good results.
Looking ahead, WH Smith said: “While the broader global economy remains uncertain, the group is well-positioned to capitalise on the ongoing recovery in our key markets and take advantage of the many opportunities ahead, including the 125 new stores won and yet to open, and our new store formats and category development across multiple geographies.
“Travel continues to perform strongly across all three divisions and we expect this to be maintained into the peak summer trading period. As a result, we now anticipate the full-year outturn to be at the higher end of analysts’ expectations.”
NAM Implications:
- With Travel Retail representing 54% of WHS revenue…
- …their Travel division recovery is significant…
- …but can still be diluted by any underperformance in their High Street retail business.
- A possible reason to divide the company into two separate businesses?
- Alternatively, wait for suppliers of the two models to do it for them?
