The introduction of the national living wage in April will have minimal impact on WHSmith, according to boss Stephen Clarke.
Labelling it “business as usual”, the retailer estimated the government policy would cost it £2m to £3m a year, but said it could easily find efficiencies to accommodate the rising wage bill.
Clarke told Retail Week: “For us it is pretty much business as usual in terms of finding efficiencies and productivity initiatives that help drive our overall productivity.
“We will trial lots of different initiatives and when we are confident they will deliver the benefit we need we will announce them and roll them out”
“We are going to approach that exactly as we approached our efficiency initiatives. We will trial lots of different initiatives and when we are confident they will deliver the benefit we need we will announce them and roll them out.”
WHSmith has calculated the wage increase represents 0.5% of its cost base, with roughly two thirds coming from its high street business and a third coming from the travel business.
The retailer has a strong track record of cutting costs to ensure profit rises despite flat sales. This morning WHSmith reported a 1% increase in annual group sales and flat like-for-likes, which Clarke said was its best sales performance since 2002.
Headline group pre-tax profit rose 8% to £123m in the year to July 25.
WHSmith has made high street cost savings of £11m in the year and as a result has increased its cost saving target to £20m over the next three years.
Clarke said cost savings are coming from across the business ranging from lease renewals to investments in technologies that increase productivity.
WHSmith’s travel business continues to outperform the high street when it comes to sales growth and Clarke said its reputation was not hurt by the media storm over it not passing on savings on VAT at its airport stores to customers.
He said: “Our biggest measure of our performance in airports is sales per passenger and our sales per passenger in the year, in the second-half and most especially over the summer period, were higher than they have been for many, many years.”
The decision on whether WH Smith will roll out its trial of the Cardmarket store format is expected in the spring.
There are currently 20 Cardmarket stores, some of which will have been open for a year in a month’s time, and a further 10 will be opened before Christmas.
Clarke said: “A bunch of the existing stores are working really well and a bunch not so well.
“The data we will use to make a decision on whether to roll them out is what the like-for-likes are over Christmas in the existing trials and our ability to pick 10 winners in the new stores.”