WHSmith warns on profit as coronavirus hits travel business

The stationery specialist said it expects between £30m and £40m to be wiped off its bottom line in the year ending August 31 as a result of falling revenue in its airport stores.

It cautioned that total sales across the group are forecast to slump between £100m and £130m.

Analysts had expected WHSmith to deliver a pre-tax profit of £79.8m and revenues of £742m.

WHSmith said that, since February, it had already seen a “significant impact” on its business in Asia-Pacific, which accounts for around 5% of its travel revenue.

It added that there had been a “material reduction in passenger numbers” at UK airports, which account for approximately 60% of its travel revenue, and in the US, which accounts for 25%.

In the second half of its financial year, WHSmith said it expects sales in its UK travel business to fall 15% as a result of “significant reductions” in March and April. It warned sales in US travel locations would be 20% below expectations, while a similar proportion of revenue will be wiped off its international travel stores.

In a fresh blow to the business last night, US President Donald Trump suspended all travel from Europe to the US for 30 days. The temporary ban, which will not apply to UK passengers, comes into force tomorrow.

Despite the disruption to its travel arm, WHSmith said it had not yet seen a “a significant impact” on its high street division, but admitted the coronavirus pandemic could lead to “reduced high street footfall”.

The warning came hours after Italy revealed plans to close almost all shops, as well as bars, restaurants and hairdressers, across the country.

WHSmith said it was “managing the business to protect profitability” and “taking all necessary action” to reduce costs.

The turbulence comes after a strong first half of its fiscal year. In the six months to February 29, group revenues climbed 7%, with sales in its travel division jumping 19%. Like-for-likes in the travel business increased 2%.

High street revenue slipped 5%, with like for likes down 4%.

WHSmith said it would provide a further update on the “evolving” coronavirus situation as part of its interim results update on April 22.

But the retailer reaffirmed that it was “positioned to benefit from the normalisation and growth of the global travel market” over the longer term.