Book sales down 6%; Travel performs well again
WH Smith has reported flat revenues and pre-tax profit down 4% in the year to end August, in preliminary results released this morning. In early trading, the retail group's shares were down 6%, to 1,904p.
Continuing a familiar pattern, Travel performed well while the group's High Street division struggled. Travel revenue was up 8%, and 3% like for like (LFL). High Street revenue was down 3% (total and LFL). Travel trading profit was up 7%, to £103m, and High Street trading profit was down 3%, to £60m. Group pre-tax profit was £134m.
Total Group revenue was up 2% at £1,262m (2017: £1,234m) with Group LFL revenue flat.
WHS said that it had carried out a review of its High Street business. It would increase its focus on core categories; wind down non-core trial initiatives including Cardmarket and WHSmith Local; restructure some operational activities; and close about six stores. Cost-cutting continues to be on the agenda: "Cost savings of £12m were delivered in the year. An additional £10m of cost savings have been identified over the next three years making a total of £19m of which £9m are planned for 2018/19."
The chain's LFL book sales were down 6%, particularly as a result of a "challenging" Christmas. WHS said that its books performance improved during the second half, driven by a good performance from titles including David Walliams World's Worst Children 3 and Dan Brown's Origin. "In addition, we continue to make improvements to our customer proposition through ease of browsing and on-shelf book recommendations. Our approach to the books business goes unchanged. We will continue to build on our areas of relative strength to make WH Smith High Street the home for lighter readers, kids and educational books while at the same time driving the overall net profitability of the category by improving the efficiency of our books operating model. In Travel, we are making good progress with our standalone bookshops and customer feedback has been excellent. Ebooks continue to decline across the market."
Stephen Clarke, group chief executive, said: "We have delivered a good performance across the Group.
"Travel accounts for over half our sales and two thirds of our profits and continues to perform strongly with revenue growth of 8% in the year. This performance has been driven by our ongoing investment in stores and growth in passenger numbers. Profit in Travel is up 7% to £103m.
"We have a fast growing international business with 286 units open across 27 countries and 50 airports. We are pleased to have won 42 new units this year including some significant tenders in South America and Europe.
"We had a good year in High Street despite the well documented challenges of the UK high street. During an encouraging second half, the business traded well and we quickly identified the latest trend in the market, becoming a one-stop-shop for all slime related products. Despite this good performance, we are not ignoring the broader challenges on the UK high street and, during the second half, we conducted a business review to ensure our High Street business is fit for purpose now and for the future.
"The Board has proposed a 13% increase in the final dividend and we have today announced a further share buyback of up to £50m reflecting the Group's cash generation and our confidence in the future prospects of the Group.
"This good performance is only possible through the hard work of all of our colleagues across the business and I am sincerely grateful for their ongoing support.
"While there is some uncertainty in the economic environment, we are pleased with the start to the new year in both businesses, and will continue to focus on profitable growth, cash generation and new opportunities to profitably invest for the future. We are well positioned for the current year and beyond."