Investor builds ups stake in WHSmith with eye to international travel rebounding

In the last month, Causeway has amassed a £178m share in WHSmith, bringing its total stake in the retailer to 9.05%, making it the single largest shareholder. The Los Angeles-based firm is best known in the UK for being the new activist investor pushing for a board shakeup at Rolls Royce.

However, despite having called for incoming Rolls Royce chairwoman Anita Frew to introduce “fresh thinking” when she takes up her new role next month, a source close to WHSmith said its relationship with the investor, who came into the fold during an emergency cash call at the beginning of the pandemic, was friendly.

WHSmith has been battered by the pandemic as trade in previously successful stores in train stations and airports sputtered to a halt as international travel ceased and people began to work increasingly from home. 

The retailer’s shares lost two-thirds of their value at the outset of the pandemic, and the business has slashed some 1,500 roles in response to the ongoing crisis. WHSmith has an international workforce 14,000 strong and shares have recovered to 37% below pre-pandemic levels. 

Although, the retailer is not out of the woods yet. At the beginning of the month, chief executive Carl Cowling said the “trajectory of the recovery in travel remains uncertain” and the profits for the year to August 2022 would be at the low end of expectations. 

In a statement issued to The Sunday Times, Causeway’s portfolio manager Jonathan Eng said: “We are firm believers in the strategy and management team of WH Smith, which is why we first invested last March and why we have continued to add to our shareholding. We have confidence in the long-term growth potential of the business and are happy to be the company’s largest shareholder.”