20th Apr 2023 15:09
(Alliance News) - WH Smith PLC on Thursday reported better first-half profit, with its Travel arm, which operates stores in rail stations and airports, leading the way.
The company posted group pretax profit of GBP45 million in the six months that ended February 28, up 32% from GBP34 million a year before. Revenue in the half-year totalled GBP859 million, up 41% from GBP608 million.
Strong momentum across its global Travel business, with a significant recovery in passenger numbers and strong average transaction value growth, was responsible for the revenue rise, WH Smith said.
Chief Executive Carl Cowling said the company expects the Travel business to represent over 70% of group revenue and around 85% of group profit from trading operations by the end of the current financial year.
Total Travel revenue increased 75% year-on-year to GBP593 million from GBP338 million. Against 2019, Travel revenue was up 48%.
"WH Smith is benefitting from the snap back in travel with its outlets across train and airport networks much busier as demand for trips and holidays has rebounded. The pandemic hit the retailer hard, as trade evaporated while people stayed at home but now the shutters are well and truly up and it's back to brisk business," Hargreaves Lansdown analyst Susannah Streeter commented.
RBC Brewin Dolphin analyst John Moore hailed WH Smith as a "well managed and financially stewarded business".
"There is some natural recovery still playing through in WH Smith's results, with a considerable rise in profits and cash generation. The retailer has been using cash from established, but low return, businesses like its high street operation to invest heavily in the highly fragmented North American travel market. That is beginning to make a difference to its bottom line, with travel expected to account for 85% of the group's profits this year," Moore commented.
"WH Smith is a really under-appreciated, well managed and financially stewarded business. As the company’s balance sheet strengthens, I would expect WH Smith to take advantage of opportunities in markets that complement its core business – such as online gift or card retailers – after a difficult period for some standalone operators in these markets."
WH Smith shares traded 2.0% lower at 1,592.00 pence each in London on Thursday afternoon in London, with the stock, like wider markets, perhaps hurt by interest rate worries.
By Eric Cunha, Alliance News news editor
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