WH Smith full-year profit boosted by travel business

Shares in WH Smith rallied after the retailer posted a rise in pre-tax profit for the year on the back of a good performance across the group, with the travel business in particular providing a boost.

For the year ended 31 August, pre-tax profit increased 8% to £121m, while total group sales were up 1% at £1.18bn, with group like-for-like sales flat.

The company said the travel business, which is focused on airports and railway stations, continued to perform well, with strong sales across all channels in the UK, reflecting its ongoing investment and growth in passenger numbers.

Like-for-like sales from the travel business were up 4%, while High Street sales fell 3% on a LFL basis.

Internationally, it said it has made good progress in growing sales and profit.

WH Smith said it delivered £11m in cost savings, in line with its plan, and increased its cost saving target to £20m over the next three years.

The company raised its dividend by 13% from last year to 39.4p. WH Smith said it had free cash flow of £109m and net funds of £15m as at 31 August.

Group chief executive Stephen Clarke said: “Looking ahead, our focus will remain on profitable growth, cash generation, investing in new opportunities and evolving our customer proposition, all to ensure we are well positioned for the future."

Peel Hunt upgraded its stance on the stock to ‘add’ from ‘hold’ and lifted its price target to 1,680p from 1,500p following the update.

“WH Smith is taking full advantage of positive macro trends in Travel, continuing to find cost savings on the High Street but crucially is also developing its international arm profitably,” it said.

At 0845 BST, WH Smith shares were up 3.2% at 1,597p.