WH Smith sees full-year results in line as travel business performs well

WH Smith said on Thursday that it expects results for the year to the end of August to be in line with expectations thanks to a strong performance from its travel business.

In a trading update ahead of its full-year results in October, the retailer said its travel business continues to perform strongly, with good sales across all of its channels.

The company’s new store opening programme in the UK and internationally is in line with its plan. It opened eight stores in Madrid Terminal 4 in mid-August and also opened the first of six stores in Rio de Janeiro. It now has 286 stores open internationally and said it continues to see further opportunities in the international news, books and convenience travel market.

Meanwhile, the high street business has been performing in line with expectations, as cost savings and margin improvements were delivered in line with its profit-focused strategy.

"We continue to invest in our new store format trials and have developed further our stationery ranges," it said.

RBC Capital Markets said: "We continue to favour WH Smith for its Travel growth expansion, which should put upwards pressure on its multiple over time, as it moves closer to higher rated Travel pureplay peers. Also WH Smith's low basket size, and high and improving margins, means it should offer relatively high earnings visibility.

"WH Smith is trading at circa 18x CY18E price-to-earnings which we consider reasonable versus pure play travel retailers on 23-28x. It also offers a 2.7% dividend yield and share buyback of up to £50m per year."

At 1100 BST, the shares were up 1.9% to 2,090p