WHSmith issues profit warning and announces capital raise
WHSmith has issued a profit warning and announced a capital raise as it reported on its revenue performance for the 14 weeks to 6 June.
Total revenue increased by 5% year-on-year on a constant currency basis, with like-for-like revenue up 2%.
Subscribe to TRBIn the UK, revenue rose by 5% and by 2% on a like-for-like basis. Like-for-like sales grew by 7% in hospitals and by 2% in rail stations, although airport sales edged down 1% due to Middle East flight disruption affecting passenger numbers.
WHSmith said one-stop-shop openings at Belfast, East Midlands, Heathrow and Liverpool airports are delivering good year-on-year growth, with positive feedback from landlords and customers.
In North America, total revenue grew by 10% although like-for-like revenue fell by 1%. Airport stores were impacted over the final seven weeks by lower passenger numbers, driven by airfare inflation and reduced airline capacity linked to the Middle East conflict. This meant like-for-like sales in airports dropped by 2%.
Meanwhile, rest of world revenue was down 2% on a constant currency basis but rose by 3% like-for-like. Five loss-making stores in Norway were closed during the period.
Looking ahead to the outcome for the year ending 31 August, WHSmith said it expects to deliver headline group profit before tax and non-underlying items of £75 million to £90 million. This is below its previous forecast of £90 million to £105 million.
The company has also announced that it will be raising capital through the placing of around 26 million shares, or around 20% of existing share value, as it looks to strengthen its balance sheet.
Leo Quinn, WHSmith executive chair, said: “Early in April, we launched a far-reaching self-help programme across WHSmith. Our goal is to greatly strengthen the Group’s operations while driving more effective implementation of value creation.
“The business has a strong core and operates in attractive markets with ample scope for profit expansion, particularly in North America. However, we need much greater capital discipline and a laser focus on returns.
“In recent years, the outcomes from certain acquired businesses and contract obligations have been very disappointing. Our priorities are to build an efficient and effective foundation for WHSmith and use this to drive a growth strategy managed for profitability.”
