WH Smith has confirmed it is on track to sell its high street division to the private equity owner of Hobbycraft by the end of the month.
The deal will see the WH Smith name disappear from British high streets and be replaced by the TG Jones brand following a £76m deal agreed with Modella Capital in March.
In a trading update on Tuesday, WH Smith gave a picture of what the slimmed-down company would look like in the future.
Without its high street stores, WH Smith’s revenue rose 5% in the 13 Weeks to 31 May, leaving it “well positioned for peak summer trading period as a pureplay travel retailer”, the company said.
WH Smith added that its expectations for the full year were unchanged, though it was “mindful of the broader economic and geopolitical uncertainty”.
Its share price rose 3% in early morning trading, with Julie Palmer, a partner at Begbies Traynor, stating that WH Smith looks “firmly back on track” after offloading its high street division.
“Now repositioned as a pureplay travel retailer, the business is off to a flying start, with revenues up across all geographies as it taps into the ongoing travel boom.”
However, some analysts were left underwhelmed. “There is a sense that investors might be expecting more from WH Smith,” said Russ Mould, investment director at AJ Bell.
“The past quarter saw 5% sales growth from the travel-only operations, which is hardly a reason to get excited.
In the UK, sales grew 5% as its airport stores performed best – like-for-like sales were up 7%. In the US, revenue rose by a more modest 3%.
“The US has been a laggard for the group in recent years and has some catching up to do,” said Mould. “Overall, WH Smith needs to step up a gear and prove it was worth flogging the cash cow that was the UK arm.”
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