WHSmith profits up 5% despite sales fall in first half

Group profit from trading operations was up 4% to £77m, with the travel arm delivering a 7% increase to £29m and the high street division recording a 2% increase to £48m.

However group like-for-likes slumped 5%, with travel down 4% and high street down 5%.

The retailer said it has acquired the Past Times brand, which it intends to “use in a similar way to the Gadget Shop brand that we acquired in 2010”.

Gross margin improved by 160 basis points.

WHSmith continued to make cost savings in its high street arm. In the half it made £9m worth of cost savings and has identified a further £8m for the second half, in line with its guidance of £17m for the full year.

Outgoing group chief executive Kate Swann said: “We have delivered another strong performance across the group. Both businesses continue to increase profit year on year, despite the challenging economic environment.

“The group remains highly cash generative enabling us to invest in our businesses and in new opportunities, while returning cash to shareholders. So far this financial year, we have returned £28m to shareholders through the share buyback announced in August 2012.

“We expect the trading environment to remain challenging, however, the business is in good shape and is well positioned for continued growth in both the UK and internationally.”

Total group sales declined from £665m to £638m. Travel sales were flat at £216m while high street sales were down 6% to £422m.

The bookseller and stationer has 121 overseas units, either open or yet to open, with a further 30 kiosks “won” in China.

Stationery was the strongest performing category, although like-for-likes were down 2%. Books declined 6% on a like-for-like basis while news and impulse purchases fell 4%. Margins improvements were made in all categories.

The retailer said it delivered “another strong performance” in travel which demonstrates “the strength of the business model”.

It said it continues to invest in new formats including its new WHSmith Express store at East Midlands Airport, as well as a WHSmith BooksPlus store at Heathrow Terminal 4.

It said the initial performance at its three children’s book stores Zoodle is “encouraging”. 

High street delivered a “resilient profit performance in challenging trading conditions”, according to WHSmith. Cost saving measures included installing more efficient and faster tills. The retailer will be rolling out voice picking across all of its distribution centres to increase productivity in the second half.