WH Smith FY expectations 'modestly' improved

Retailer WH Smith said on Wednesday that its expectations for the full year had improved "modestly" as it hailed continued strong momentum across its global travel business.

For the 13 weeks to 27 May, it reported a 23% jump in group revenue versus a year earlier.

"As we approach the peak trading period in travel, the business continues to perform strongly across all our key travel markets, with total travel revenue in the 13 weeks to 27 May 2023 up 31% versus the prior year," it said.

"As such, since our announcement on the 20 April, our expectations for the full financial year have further improved."

WH Smith said the UK division continues to perform strongly, with revenue up 24% on last year. This was driven by category expansion, a focus on average transaction value, the success of InMotion, its travel essentials one-stop-shop format and the ongoing recovery in passenger numbers.

Total revenue in North America was up 26% as it opens its pipeline of new stores and passenger numbers continue to recover versus 2019 levels.

Meanwhile, the Rest of World division performed "extremely well", with revenues up 79%. The Australian and Asian businesses continue to recover and the company is still making progress on winning new business, with further wins in Europe in the period.

Finally, the High Street business saw total revenue rise 2% in the period. WH Smith said its store network performed "well".

"Looking ahead, the group is in a good position as we approach the peak summer trading period," it said.

"Trading is strong across all three travel divisions, and we are very well positioned to capitalise on the substantial growth drivers across our markets."

Russ Mould, investment director at AJ Bell, said: "Pre-pandemic, WH Smith’s travel division was its jewel in the crown and the business is beginning to regain its shine.

"Benefiting from a captive audience of time-poor shoppers in airports and stations, the operation is able to generate healthy returns by selling a range of products from magazines, food and snacks to Bluetooth headphones.

"The company sees a big summer recovery as people jet off for their break in the sun and even the ongoing train strikes don’t seem to be denting the prospects for the travel arm to any great degree.

"With a pipeline of new stores being rolled out the company continues to execute a growth strategy which was on pause during Covid.

"All the while the high street operation continues to chug away quietly in the background - its stores may score poorly in consumer surveys but remain a profitable and cash generative part of the group. If that changes pressure may build to spin off the travel unit as a separate business."