WH Smith sales slip over Christmas period as high street struggles

Sales at retailer WH Smith fell over the Christmas period, mostly on the back of a weaker performance from its high street stores.

In the 20 weeks to 20 January, like-for-like sales were down 1% on the year, while total sales were flat. Total sales in the high street division were down 5%, with LFL sales 4% lower, in line with expectations.

Stationery performed well but book sales were more challenging due to the decline in spoof humour titles and no new, big publishing trends. Meanwhile, gross margin was up less than expected year-on-year, in part reflecting the lower sales of high margin spoof humour books compared to the same period last year.

Total sales in the travel business were up 7%, with LFL sales up 3%. The company said it has continued to see good sales growth across all of its key channels and gross margin continues to grow in line with the plan, driven by category mix management.

WH Smith's store opening programme in the UK is on track and it expects to open around 15 new units this year. In addition, the group's new large airport stores in Gatwick and Stansted opened in the period and are performing well with good feedback from both landlords and customers.

In the international business, the company now has 249 units open, including two of the 10 units it has won in Changi Airport, Singapore. It expects all 10 units there to be open this spring.

Chief executive Stephen Clarke said: "Our travel business now accounts for almost two thirds of the group's annual profit and we continue to deliver strong sales growth across all our key channels. This was driven by ongoing investment in the business and continued growth in passenger numbers in our airport stores over the Christmas period. Our recently opened new concept store in Gatwick South has performed particularly well and is ahead of plan.

"High Street sales were in line with expectations. Our stationery and seasonal ranges, including cards and wrap, performed well with good sales growth versus last year. Book sales were more challenging due to the decline in spoof humour titles and no new, big publishing trends.

"Looking ahead, while there is some uncertainty in the broader economic environment, we remain confident that the group is well positioned for the year ahead as we continue to focus on profitable growth, cash generation and investing in new opportunities."

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Christmas was a stationary affair for WH Smith, with sales flatlining across the group as a whole. The newsagent is now a two tier company, with a high street estate which is withering on the vine, and a travel business which is growing at quite a clip.

"Christmas 2017 at WH Smith suffered from a lack of any big new publishing trends. 2015 was the year of the adult colouring book craze, while in 2016 sales were boosted by the popularity of spoof humour titles such as Five on Brexit Island and the Ladybird Book of the Hipster. Without any new book crazes taking hold in Christmas 2017, sales were always going to be on the back foot compared to last year, and so a flat performance is actually a reasonable outcome for WH Smith."

At 1010 GMT, the shares were down 3.1% to 2,066p.