11th Oct 2018 08:39
LONDON (Alliance News) - WH Smith PLC shares dropped on Thursday after the newspaper and stationary retailer said it will restructure its UK high street unit after disappointing annual results from the division.
WH Smith shares were trading down 7.8% at 1,875.0 pence early Thursday, one of the worst fallers in the FTSE 250 index.
"High Street delivered a good performance despite the well documented challenges of the UK high street," WH Smith said of the division.
For the year to August 31, the unit's trading profit slipped to GBP60 million from GBP62 million a year prior. Total revenue decreased by 3% year-on-year.
"Despite the good performance from our High Street business, we are not ignoring the challenging conditions being experienced on the high street more generally," the firm added.
The retailer decided to close around six of its high street stores and take a "forensic" approach to its cost base to ensure the business remains "fit for purpose".
It will also "wind down" non-core activities such as WH Smith Local and Cardmarket, a budget greetings card chain.
For the year to August 31, the retailer posted overall pretax profit down 4% to GBP134 million from GBP140 million, after incurring a GBP11 million charge on restructuring and store closure costs.
Meanwhile, revenue increased to GBP1.26 billion from GBP1.23 billion a year prior, lifted by WH Smith's more healthy Travel business, which operates outlets in airports and other travel hubs.
"We have delivered a good performance across the group," Chief Executive Officer Stephen Clarke said.
The group's Travel business, which accounts for half of the company's sales and two thirds of profits, saw revenue up 8% compared to last year and trading profit up by 7% to GBP103 million.
Despite the fall in profit, WH Smith hiked its total dividend by 13% to 54.1p per share from 48.2p after proposing a final dividend of 38.1p.
Looking to the future, Clarke added: "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."
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