Bookseller and stationer WHSmith delivered better than expected full-year results, revealing it had been profitable in its second half for the first time in more than 10 years.
The retailer also outlined plans to open travel shops in Delhi as well as stores in UK workplaces.
In the year to August 31, group pre-tax profits increased from £76m to £81m. Travel operating profit jumped 17% to £48m and high street operating profit rose 4% to £49m.
Total group sales slid 1% and like-for-likes 5%. Travel like-for-likes decreased 2% and the decline was 6% at high street stores.
Stephen Clarke, managing director and commercial director of WHSmith’s high street division, said: “This is the first time in over 10 years we’ve made money in the second half, due to our different mix of business and shifting away from entertainment.”
Clarke said he expects the trend to continue. However, he added: “We’re not seeing any change in consumer attitude at the minute, and are planning for a tough Christmas.”
WHSmith’s workplace stores will be aligned with its travel division, which generated a margin increase of 220 basis points. Three are open at the moment and a total of 10 are expected to be operational by the end of this financial year.
The retailer is also opening airport stores in Delhi, which will be its first foray into India. WHSmith wants five Delhi stores by the end of the year, as part of a new franchise model. It already has five airport stores in Copenhagen, run as a partnership, and in Shannon, Republic of Ireland, which it runs directly.
WHSmith said travel growth held up despite soft passenger numbers. Clarke does not expect any recovery in passenger numbers this year.
The retailer opened nine high street stores in the period, and a similar number will open this year.
Shore Capital analyst Kate Calvert welcomed “another good performance from WHSmith, beating expectations”. She said the strong performance in travel “demonstrates how the WHSmith story is changing” and that the retailer’s decision accompanying the results to return £35m of cash to shareholders “highlights the strength of the business model and management’s confidence in the future”.
Investec’s David Jeary said: “The expansion of its travel division into new channels and international destinations looks set to lay to rest the criticism that WHSmith can’t shrink its way to profit growth forever.”
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