WH Smith shares jumped by 3.8% in early trading after the newsagent group posted an 8% increase in full-year pre-tax profit.
The retail chain saw profit increase in both its travel and retail business in the year to 31 August after what chief executive Stephen Clarke called a “strong performance”.
The increase in profit was achieved in the face of a 3% decline in like-for-like sales, which slipped to £1.16bn last year from £1.19bn in 2012/13.
Clarke commented: “The Group has delivered a strong performance with EPS up 18% year on year. The distinct strategies for each of our businesses continue to deliver good profit growth.”
Analysts at Investec called the accounts “another good set of FY results with a small beat to consensus”, adding: “Travel remains the driver of group growth [and] highlight of the year has to be travel’s return to positive LFL growth in Q4, the first time since 2008.”
Shares rose to 1,030p in early trading having previously slipped from 1,160p in early September.
WH Smith’s travel division saw full-year trading profit increase by 11% to £73m, while sales were up 4% and flat on a like-for-like basis, reflecting an improvement in passenger trends. The company opened 30 new units travel in the UK during the year, taking its total UK units to 596.
During the year it opened four M&S Simply Food units in locations such as Blackpool Hospital and Royal Free Hospital. The company now has six M&S Simply Food units open, with further openings planned.
Sales continued to fall in its high-street business – with total sales down 6% and 5% on a like-for-like basis. However, trading profit was up 4% to £58m due to tightly controlled costs. The company achieved high-street cost savings of £14m last year and has increased its targeted cost savings to £21m over the next three years, £11m of which will be in the current financial year.
“Looking ahead, our focus will remain on profitable growth, cash generation and investing in new opportunities that position us well for the future,” Clarke added.
WH Smith plans to grow its international footprint which, while profitable, currently “remains a small part” of its overall business. The retailer said it had made progress in its primary hubs of Australia, South-East Asia, Middle East, India and Europe, and now has 138 units open across four channels (air, rail, hospitals and malls), with a further 27 units won, but not yet open.
Meanwhile, WH Smith announced an additional share buyback programme today of up to £50m, having completed the £50m share buyback announced in October 2013.
Headline diluted earnings per share increased by 18% to 77.7p (from 66.1p last year), reflecting the increase in profit, a lower basic weighted average number of shares in issue following the share buyback, and a decrease in the effective tax rate from 21% to 18%.
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