WH Smith swings to profit as travel rebounds from Covid restrictions

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Library and stationery WH Smith posted a full-year profit as a rebound in air and rail travel boosted revenue, with that momentum continuing into the new fiscal year.

The company posted a pre-tax profit of £63m on Thursday, compared to a loss of £116m a year ago when Covid travel restrictions were in place. Group turnover fell from £886 million to £1,400 million.

Travel revenue in the 10 weeks to Nov. 5 was 148% of 2019 levels before the pandemic, he said. For the year to August 31, the business made a trading profit of £96m against a loss of £44m. High Street stores earned £45m, up from £9m.

“We have started the year well and, despite the economic uncertainty, travel habits globally continue to improve and this, combined with the strength of the group’s growth opportunities, means that we are well positioned. for a year of significant progress in 2023,” said chief executive Carl Cowling.

WH Smith also took over dividends for investors, with a final payout of 9.1 pa per share. The group hailed a strong recovery in airport stores, particularly over the summer, amid a surge in the number of holidaymakers traveling overseas as travel markets reopened around the world.

Across its UK travel division, which also includes hospital sites, sales in July and August jumped 121% and 126% from 2019 levels, even with airport disruptions and caps to limit the number of passengers traveling.

“Passenger numbers have rebounded strongly, although there is still some recovery left, and we are very well positioned to capitalize on significant space growth opportunities in each of our markets,” the company said.

The group has been buoyed by expansion into the travel sector, having bought US airport technology retailer InMotion in 2018.

It is rolling out 150 new stores in 16 countries, including 70 in North America and in airports such as Los Angeles, Salt Lake City, Brussels, Oslo and Melbourne.

“WH Smith has spread its wings in the United States, Europe and Australia with great success. The fact that his North American business is poised to turn a bigger profit than his UK business shows that he is a very different beast to the old WH Smith that most people know,” he said. declared A.Bell Chief Investment Officer Russ Mold.

“Yes, there are still those messy stores across the UK selling overpriced chocolate oranges and calendars from years ago, but those outlets are cash cows for the business. He’s found a formula that makes money without having to worry about sprucing up stores.”

“The return of the dividend will be welcomed by investors, but more importantly it signals that WH Smith has reached a tipping point. Covid appears to be in the rear view mirror of the business and management is optimistic about the outlook for the This sends a very strong signal to the market.

Mr Mold also noted that the group’s online business was making inroads, with its own website selling a wide range of products alongside several specialized sites.

“Funkypigeon is a profitable greeting card seller while also selling the widest range of pens in the world through the Cult Pens website. These initiatives suggest that WH Smith is not the old-fashioned retailer that many people think he is,” he added. .

Reporting by Frank Prenesti for Sharecast.com

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