WH Smith has reported a 16% increase in annual profits driven by its success in airports and train stations.
The company’s revenue rose 7% to £1.9bn with its travel business, especially in the UK, performing strongly in its latest full year results.
Profits from shops in the UK’s railway stations, airports and hospitals surged 20% to £122m as passenger numbers improved during peak trading periods.
“We are making excellent progress in the UK as we continue to benefit from the rollout of our one-stop-shop format, which is creating significant opportunities to further grow profitability,” said group CEO Carl Cowling.
Analysts are encouraging WH Smith to boost its food options to convert the high footfall of visitors into shoppers. The chain has already started to strengthen its offering with Smith’s Family Kitchen, an own-brand food-to-go option.
“[WH Smith] must do more to compete with cheaper alternatives from the grocers offering meal deal options for consumers on the go outside of airports,” said Tash Van Boxel, retail analyst at GlobalData. “[It] must ensure that pricing is competitive, as taste alone will not be enough for consumers to opt for WH Smith over its rivals.
WH Smith has grown its UK travel chain in the past year with 14 new sites, and plans to open another three to eight in the coming year. By contrast, its high street stores have been scaled back to 500 after 14 were shut down.
Its overall high street performance continues to hamper growth, falling 4% to £452m against a weak comparative figure. High street profits fell 9.3% to £39m, despite attempts to inject life back into its high street stores through its Toys’R’Us concessions.
The company’s share price fell by 5% in early morning trading, reflecting this weaker high street performance. “It highlights that WH Smith must do more to improve margins in this fascia,” said Van Boxel at GlobalData.
Cowling added the company’s most exciting growth opportunity was now in North America, where it recently won new openings at Dallas, Denver and Washington Dulles airports. WH Smith is focusing on expanding its travel shops in North America, with approximately 60 new stores in the pipeline.
The US is currently seeing increased air traffic and numerous airport upgrades. “As these airports modernise, WH Smith is well-positioned to capture more market share,” said Yanmei Tang, an analyst at Third Bridge.
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