WH Smith hailed an impressive start to the financial year as the bounce back in travel over the festive period provided a windfall for the group’s outlets.
Turnover shot up by 41 per cent in the 20 weeks ending 14 January, compared to last year when trading was severely affected by the reimposition of Covid-19 restrictions in response to the Omicron variant’s emergence.
Loosening lockdown rules and skyrocketing airport sales helped revenue in the group’s UK travel arm climb by 70 per cent, as did robust performances from its hospital stores and technology accessories brand InMotion.
Recovery: Loosening lockdown rules and skyrocketing airport sales helped revenue in WH Smith’s UK travel arm climb by 70 per cent in the 20 weeks ending 14 January
During the same period, travel sales grew by almost a third in North America, while they nearly tripled across the rest of the world as the group opened new locations in cities like Brussels, Belgium and Malaysia’s capital Kuala Lumpur.
Total revenue was also 20 per cent higher on 2019 levels, although slightly down on a like-for-like basis, as airline and rail passenger numbers remain significantly below pre-pandemic volumes.
Widespread flight cancellations and delays have stifled the recovery at the group’s airport sites, especially in the UK and Europe, as labour shortages have left airlines struggling to cope with the resurgence in travellers.
Concurrently, footfall at prominent British commuter hubs has been impacted by the pandemic-induced rise in people working from home and a series of strikes over pay and conditions by railway staff.
Nonetheless, WH Smith said global passenger volumes are continuing to rebound even against a backdrop of heightened economic uncertainty.
Having launched 40 new stores since the beginning of September, it has tenders to open another 130 locations, including the airports of Reagan National in Washington D.C. and Palm Springs in California.
Chief executive Carl Cowling said the firm was ‘in its strongest ever position as a global travel retailer’, following the impressive results and gaining of new tenders.
He added: ‘This strength, combined with the ongoing improvement in passenger numbers across the globe, means that we are confident of another year of significant growth in 2023.’
Back in November, WH Smith reinstated its dividend after revealing that its annual profits had marginally eclipsed expectations and as a reflection of confidence in its future performance.
The FTSE 250 group had suspended shareholder payouts two years previously when it was forced to shut most of its venues at the outbreak of the pandemic.
As trading curbs were loosened, demand recovered more quickly at the group’s high street business, partly because of surging sales at its online brands, such as greeting cards seller funkypigeon.com.
During the most recent reporting period, though, the division’s like-for-like sales flatlined and remained 10 per cent below pre-pandemic levels.
AJ Bell investment director Russ Mould said: ‘For years, the UK high street operation has been something of an afterthought, run as efficiently as possible with a firm control on costs.
‘At some point, a debate over the role of the high street arm in the wider group may start to heat up, and investors may look for a sale or spin-off of a business which has very different growth prospects.’
WH Smith shares were 2.2 per cent lower at £15.82 on late Wednesday afternoon, although their value has still grown by over a third in the past three months.
