26th Jan 2024 12:27
(Alliance News) - WH Smith PLC's travel arm was once again led the charge for the retailer, which has "quietly chipped away at its high street image".
However, the stock fell on Friday afternoon, suggesting investors do not believe the company completely knocked it out of the park in the first few weeks of its financial year. Shares in the company traded 2.0% lower at 1,208.00p each in London on Friday afternoon.
Total sales in the first 20 weeks to January 20 rose 8% year-on-year, climbing 13% in the Travel arm alone. Its High Street offering was less robust, with sales in that division declining 4% on a year earlier. The firm ends its financial year in August.
On a like-for-like basis, sales were up 5%, driven by a 10% jump in Travel, partly offset by a 3% fall in High Street.
Chief Executive Carl Cowling said ahead of the London-based firm's annual general meeting: "I am pleased with the start to the financial year. Our Travel business is growing strongly across all our divisions, and we have seen a notably strong performance in the UK, our largest division, with total revenue up 15% and like-for-like revenue up 14%.
"During the period, we successfully opened our largest UK Travel store at Birmingham airport - a one-stop-shop for travel essentials - and we have received very positive feedback from both landlord and customers."
Cowling noted the firm has also made "excellent progress in North America", with WH Smith on track to open 50 new stores there during this financial year.
"In total, we are on track to open over 110 stores this financial year," Cowling added.
"The group is trading well and is in its strongest ever position as a global travel retailer. We are confident of another year of significant growth in 2024."
WH Smith announces half-year results on April 25.
Hargreaves Lansdown analyst Sophie Lund-Yates commented: "WH Smith has quietly chipped away at its high street image and instead become a well-loved fixture at airports, train stations and motorway services. This move is paying dividends. Revenue in the travel business is up by double digits as airport numbers improve, and the group's also benefitting from its locations in hospitals. The strategy involves opening stores in locations where people have little option but to splash the cash, often with a convenience tax added to the cost. Whether it's a service station sandwich or book for your long flight, WH Smith is waiting to capture convenience cash.
"WH Smith has its eyes firmly peeled on the horizon, with international expansion of the travel business, including in the US, offering up enormous potential. The high street business rumbles on but is continuing to see declines and cost savings are still being targeted. This part of the business is no longer the headline though, and markets are wise to that fact."
AJ Bell analyst Russ Mould said WH Smith has the job of growing in travel and keeping its high street offering "stable".
"Its latest trading update shows the retailer has essentially delivered on both counts but it is certainly not a five-star performance," the analyst said.
By Eric Cunha, Alliance News news editor
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