WHSmith – celebrating its 225th anniversary this year – will show how its travel business has continued to soar when it issues preliminary results next week.
The high street stalwart has enjoyed growth in its travel arm during the financial year as it has worked to expand its global airport empire.
It has been a tougher year over at WHSmith’s high street division, however, which has come up against tough comparables, and where, at the half-year point, like-for-likes were down 3%.
But the City seems impressed and, in August, with its share price on a steady upward trajectory, the UK’s oldest retail chain issued further reassurance in the form of a characteristically brief pre-close update.
With its strategy of driving profits on the high street and expanding in travel, WHSmith said it was on track to deliver on all its promises next Thursday.
High-flying travel arm
While WHSmith’s 225-year heritage lies in selling stationery on the high street, its travel business is fast becoming its bread and butter.
During the period, in which the retailer commenced a store opening programme and launched its first three Italian airport stores, the business said it generated “good sales” across all channels in this division.
As Mark Photiades, director of general retail research at Cantor Fitzgerald Europe, said after its “solid” pre-close update in August, the long term international growth opportunity in the travel business is clear.
The City will be keen to hear on Thursday how the retailer’s fledgling books-only stores are trading and the anticipated scale of this venture, as well as which locations the increasingly international firm may be targeting next.
With 768 travel outlets already under its belt, WHSmith has far from exhausted its potential, with plenty of untapped territories for the taking.
Holding firm on the high street
The story inevitably seems less rosy on the high street this year after 2015’s adult colouring book phenomenon helped WHSmith notch up its best sales for 15 years.
“Despite its profit-focused strategy, analysts predict there will be no year-on-year EBIT growth in its high street arm this year and, unless the Enid Blyton parody books have kept pace with adult colouring, sales are unlikely to match up either”
Up against these comparables, a tougher trading environment and the absence of a craze on quite the same scale, the retailer has had to run much harder to stand still.
Despite its profit-focused strategy, analysts predict there will be no year-on-year EBIT growth in its high street arm this year and, unless the Enid Blyton parody books have kept pace with adult colouring, sales are unlikely to match up either.
Some retail watchers described WHSmith’s high street performance in the first half of the year as “disappointing”. But it has remained proactive by, for example, rearranging its oft-criticised stores in order to drive sales.
“The retailer found success in moving seasonal stationery to the front of stores, increasing the number of Post Offices in stores to 162 and administering general cost-saving initiatives, such as store contract renegotiations,” said GlobalData analyst Sarah Johns.
WHSmith is also rolling out the wireless headphone offer, which has proved successful in its travel business, into high street stores, and has started experimenting with new store concepts to lure tech-led shoppers.
Read more: WHSmith trials a new high street concept
On the hot topic of its high street aesthetic, group chief executive Steve Clarke told Retail Week that all the stores – even those in more rural locations – would be addressed over time.
And, as part of a board reshuffle, Clarke moved Carl Cowling out of WHSmith’s travel business to head up the high street. Cowling’s successes in the travel business will no doubt have given investors added confidence.
Having already delivered margin improvements and further cost reductions on the high street, Cowling could be the man to get WHSmith’s high street division flying as high as its travel arm.