WH Smith share prices fall as it urges caution despite profit increase
WH Smith (LON:SMWH) released its six month financial update today showing an increase in profit despite a fall in like-for-like sales. However, its share price has dropped after the high-street newsagent and stationary retailer said it remained ‘cautious’ about consumer spending.
Rob Hull
shareprices.com - Thursday, April 22, 2010
The group released interim results for the six months ended 28 February which showed a four per cent increase in total profit from trading operations with travel operating profit up by 15 per cent to £23 from £20.
Trading at high-street stores remained flat at £47m putting group profit before tax up two per cent to £62m.
But, with like-for-like total sales down four per cent, Group Chief Executive Kate Swann, who has been strongly linked to succeed Adam Crozier at Royal Mail, said: “Looking forward we remain cautious about consumer spending and our plans reflect this”.
As a direct result, share prices have dropped as low as 1.50 per cent already today and currently sit 1.07 per cent down at 509.00p at 11:30BST.
And despite Swann saying: “The Interim dividend is up 13 per cent, demonstrating the Board’s confidence in the future prospects of the Group and its continued cash generative nature,” there appears to be no plan to extend the rolling share buyback scheme the group put £35m into in the last six months.
Shareholders should be in line for an increased dividend of 13 per cent to 6.1p after earnings per share increased to 31.6p for the first half of the year compared to 31.2p in the same period of 2009.
WH Smith said it was happy with the performance of the travel operations and high-street profit should increase in the second half of the year: “We continue with our strategy to rebalance the mix of our business towards our core categories, reducing our presence in Entertainment.
“Entertainment is disproportionately weighted towards the first half, and consequently the profile of profit generation will continue, as in previous years, to shift towards the second half.”
The group currently sits in the top twenty of fallers on the FTSE 250 with JKX Oil & Gas (LON:JKX) heading the leader board with share prices 3.4 per cent down.
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