Travel continues to underpin WH Smith performance
By Josh White
Date: Wednesday 22 Jan 2020
(Sharecast News) - WH Smith reported "good" performance in the 20 weeks ended 18 January on Wednesday, with total revenue up 7% and like-for-like revenue down 1% for the period.
The FTSE 250 retailer said that in its travel division, total revenue was up 19%, or up 5% excluding InMotion and Marshall Retail Group, with like-for-like revenue up 3%.
In its UK travel business, WH Smith said it saw "good" sales growth across all of its key channels, with strong sales per passenger driven by its initiatives and ongoing investment, and gross margin in line with plan.
Its store opening programme in the UK remained on track, and the firm said it was expecting to open around 15 to 20 new units in the current year, including around eight units in hospitals.
The company also said that, following its partnership with Well Pharmacy, it would also open a new flagship pharmacy format at Heathrow Terminal 2 later in the year.
Looking at its strategy, WH Smith said its ambition to grow its travel business outside the UK was also progressing "well", having completed the acquisition of US travel retailer Marshall Retail Group (MRG) ahead of plan on 20 December.
The board said the store opening programme for MRG remained on track, with integration into the WH Smith group said to be progressing well.
Since announcing its intention to acquire the business on 17 October, the company said it had won a further eight units in the US, including MRG, WH Smith and InMotion branded stores, which the board said demonstrated the growth opportunities it saw for the group in the US.
Outside of the US, it said it had continued to make "good progress", and had recently won a tender at Berlin Brandenburg Airport to open three units, including its first InMotion store in Germany.
Following the acquisition of MRG, WH Smith Travel operated more than 600 stores outside of the UK, including more than 280 stores in North America, and over 590 stores in the UK, making a total of nearly 1,200 travel stores across 32 countries.
In the company's high street business, WH Smith said its strategy of actively managing its space, gross margin growth and cost control was still delivering sustainable profit and "good" cash generation.
Total revenue there was down 5%, with like-for-like revenue also down 5%.
Gross margin was ahead of plan, the board said, and the company had identified £3m of additional cost savings which would be weighted towards the second half of the current financial year, bringing the total cost savings for the year to £12m.
"We are pleased with the progress the group has made in the first 20 weeks, with total revenue up 7%," said group chief executive Carl Cowling.
"During the period, we completed the acquisition of MRG ahead of plan and integration into the group is progressing well.
"This acquisition is in line with our strategic focus to grow travel, almost doubles the size of our international travel business and accelerates growth in the US, the world's largest travel retail market."
Since announcing its intention to acquire the business, Cowling said the board was "delighted" to have won a further eight new units in the US.
"In UK travel, we have seen continued growth across all our key channels and we are on track to open a new flagship pharmacy format at Heathrow Terminal 2 this summer.
"Our high street strategy continues to deliver through continued gross margin gains and tight cost control.
"Looking ahead, we are on track for the current year and as we continue to grow our share of the global travel retail market, the group is well positioned for the years ahead."
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