Last week, the retailer announced the acquisition of 23 airport units from Alpha Retail, as well as deals for eight others, including five at Copenhagen Airport. In March, WHSmith bought 72 hospital units and secured a deal to open 29 motorway services stores.
The retailer plans to focus on converting the acquired stores and driving their sales performance, and emphasised that the Copenhagen deal did not presage wider international expansion.
The acquisitions came as WHSmith increased first-half pre-tax profits 8 per cent to£64 million, on the back of group sales up 2 per cent to£734 million.
Although the travel business outperformed the high street, with a 3 per cent underlying like-for-like increase, the high street’s performance was ahead of expectations with a 3 per cent like-for-like decline and a 100 basis-point margin improvement, as chief executive Kate Swann continues to re-engineer the product mix.
Entertainment now forms 12 per cent of the sales mix, but the retailer wants to reduce it further, to mid-single digit levels. 65 Post Office counters opened during the period, with a further 12 to follow by this autumn and WHSmith plans to introduce Bureaux de Change to 50 stores by next spring.
Swann warned that the outlook remains uncertain, but that the retailer is confident that its low average transaction value will shield it from the worst of the downturn. Swann – who has a reputation for being ruthless on costs – has earmarked a further£8 million of savings for this year and£9 million for next year.
Landsbanki analyst Charles Nichols upgraded the shares from hold to buy. “We are highly impressed with both the reliability of the group and the significant development of new channels for growth,” he said.
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