WHSmith makes its first foray into China as first half profits climb 5%

The books and stationery retailer has opened 12 kiosks in the Shanghai underground system and has secured 18 further locations to open in the near future.

The move comes as WHSmith today reported total group pre-tax profit rose 5% to £69m in the six months to February 28. In its travel division, trading profit rose 7% to £29m, and in its high street division, trading profit is up 2% to £48m.

The kiosks carry a small range of newspapers, magazines, food and confectionary.

Group finance director Robert Moorhead said: “It [the kiosks] is an opportunity to get our brand in front of a lot of people. It’s our first step into China and it is clearly a massive country so there is a huge opportunity.”

WHSmith now has 121 shops internationally, with new locations secured in the Middle East, southeast Asia and Scandinavia.

WHSmith travel total sales were flat with like-for-like sales down 4%, while high street total sales were down 6% and like-for-like sales down 5%.

Moorhead said both divisions are affected by the tough economic climate, with “no real change in passenger numbers” for its travel arm, and he said the retailer is “not expecting any change” in the high street climate in the second half.

WHSmith is trialling several new formats as it seeks to develop new brands. It has opened a WHSmith Express store at East Midlands airport, a WHSmith BooksPlus shop at Heathrow T4 and three childrens shops called Zoodle, two in Manchester Airport and one in Melbourne Airport.

Moorhead said: “It’s early days [with the trials] but we’re really encouraged so far.” He did not rule out opening some of the trial fascias on the high street if the trials prove successful.

WHSmith has also opened an M&S Simply Food store in Salford Hospital on a franchisee basis. A further shop will open in the second half.

In the high street division, the retailer delivered £9m of cost savings with a further £8m identified for the second half.

Moorhead explained cost savings included the roll out of new tills which are more energy efficient, faster and have lower maintenance costs. It will roll out voice picking across its DCs in the second half to increase productivity.

The retailer is also trialling cost initiatives such as pulping returns to a books publisher saving on transport and processing costs and adding time clocks to its in-store chillers. Moorhead said: “Clocks on our chillers mean a drink will be cold when the customer wants to buy it but not in the middle of the night.”

He said the business still has other areas to explore for cost savings. “We want to make the business as flexible as possible,” he said.

WHSmith has bought the Past Times brand which it plans to use in the same way as the Gadgetshop brand it bought in 2010. Moorhead said the retailer bought the brand predominantly for its Christmas gifting range.

He said there are no plans at present to open standalone stores or an online presence for Past Times.