WH Smith interim profits grow 4pc

Retailer WH Smiths grew profits 4% in the first half of the year as sales from its travel arm more than offset continued decline of the high street business.

Group revenues in the six months to 28 February came out at £643m, up 2% on the same period last year thanks to a net 23 more stores open by the period end, but were flat on a like-for-like basis as travel LFL sales rose 5% and high street LFL sales fell 3%.

Group profit before tax increased 4% to £83m and diluted earnings per share increased by 7% to 61.6p, reflecting share buybacks.

An interim dividend of 14.6p per share was declared, up 9% on last year.

Travel, the division that includes outlets in stations and airports run either directly or via joint-ventures or franchises, grew trading profit 11% to £39m from total sales up 10% thanks to 3% of forex benefits from the international business plus new store openings.

The UK side of the travel business was said to be on track to open 15 outlets over the full year, while the international business won 23 new tenders in the half, including 10 units in Singapore's massive Changi airport, to take the total to 255, of which 213 were open at the end of February.

High street profits were flat at £53m, in line with expectations as the division matched a strong performance last year, as gross margins were boosted from £7m of cost savings in the half, with a further £3m identified for the second half.

Stationery performed particularly well over the Christmas period driven by strong sales from our new seasonal product ranges and books benefitted from good sales of spoof humour titles.

Shares in SMWH fell 2.6% to 1,777p in the opening minutes on Wednesday.

Analysts at Canacord Genuity said WH Smith remains one of the best managed businesses within the General Retail sector in its view, with an enviably long track record of profit growth and cash generation.

"Travel, aided in more recent years by expansion into the international arena, is the key sentiment and valuation driver. It has delivered strong LFL growth of 5% in the last four half-year periods, with H2 therefore facing a strong cumulative comparative."