WH Smith sales boosted by travel segment

Total sales in the travel segment were up 13% on the same period a year earlier, or 16% on a constant currency basis.

Total revenue in Travel UK - the company’s largest segment - rose 15% on the same period a year earlier, or 14% on a like-for-like basis. WH Smith said it continues to see improving passenger numbers across UK Air, and a strong performance in Hospitals, while Rail is performing well.

Revenue in North America rose 7%, but was flat on a LFL basis, while Rest of World saw total growth of 19% and LFL growth of 12%.

Chief executive Carl Cowling said: "During the period, we successfully opened our largest UK Travel store at Birmingham airport - a one-stop-shop for travel essentials - and we have received very positive feedback from both landlord and customers.

"We continue to make excellent progress in North America, and I am particularly excited by the substantial growth opportunities that exist in this market. We are on track to open over 50 new stores in North America this financial year.

"In total, we are on track to open over 110 stores this financial year.

"The group is trading well and is in its strongest ever position as a global travel retailer. We are confident of another year of significant growth in 2024."

Russ Mould, investment director at AJ Bell, said: "There are two tasks for WH Smith’s management on a rolling basis - keep the travel stores growing and make sure the UK high street stores remain stable. Its latest trading update shows the retailer has essentially delivered on both counts but it is certainly not a five-star performance.

"The travel arm is doing ok - its stores in transport hubs can charge more for food, drinks and other products as there is not a lot of competition and travellers do not have either the time or even the option to find alternative shops.

"WH Smith continues to open new travel stores and it is benefiting from the ongoing strength in the travel sector where individuals seem happier to spend more on experiences than material goods. Train strikes in the UK are unhelpful but the travel arm is a global business so benefits from geographic diversification.

"The key area to watch is the pace of revenue growth in the US, which has ground to a halt on a like-for-like basis. That puts more pressure on the group to accelerate new store openings while also getting the tills ringing more often in existing sites.

"The high street business is essentially the cash machine which provides strong support for the group to expand and pay dividends to shareholders. The stores are not shiny and new, little money seems to be spent on refurbishments and it appears to run on a skeleton crew as it cuts costs to the bone. For as long as people are buying the odd magazine, paperbacks, stationery, wrapping paper or board game, WH Smith’s high street shops stand a good chance of survival.

"Like-for-like high street revenue in the 20 weeks to 20 January 2024 fell by 3% which isn’t disastrous and is in line with management’s expectations. No-one expects the UK high street arm to deliver spectacular revenue growth, its job is to simply keep ticking over and make a tidy profit."