WHSmith profits tumble despite revenue rising 5% to £1.6bn
WHSmith has reported a 5% rise in annual group revenue to £1.6 billion, but profit fell as UK contract renewals, inflation and wider economic pressures took their toll.
In the year to 31 August, like-for-like sales grew by 2%. By region, UK revenue rose by 4%, North America by 9% and the rest of the world by 1%.
Subscribe to TRBPre-tax profit before non-underlying items fell to £76 million from a prior £108 million. The company said this was in line with guidance after it was hit by UK contract renewals, inflation and wider economic pressures.
Non-underlying items came to £164 million, up from £92 million a year earlier. These included investment in group transformation and impairments, with a cash outflow of £48 million, compared with £38 million last year.
Leo Quinn, WHSmith executive chair, said: “This last year, we have commenced a fundamental reset of the group. The capital raise supported by our shareholders strengthened the balance sheet.
“It also enabled us to launch a self-help programme focused on restructuring the cost base, improving cash generation and accelerating our store portfolio rationalisation to eliminate loss-making investments. Going forward, our decisions and capital allocation will be aligned with a rigorous assessment of returns.
“In parallel, we are working to provide the group with a foundation for sustainable, profitable growth, including investing in robust systems and governance processes to support successful execution.
“As we accelerate the pace, this must go hand in hand with building a high-performing retail culture that gives our people the confidence and accountability to make faster decisions and drive value.”
WHSmith said group like-for-like revenue was flat in the first ten weeks of the current financial year with total constant currency revenue growth of 1%. This was in line with expectations as the business continues to face softer consumer demand due to global macroeconomic pressures and lower passenger volumes in North America.
Looking ahead, the group said it will continue to plan cautiously given ongoing economic uncertainty, but will keep strengthening its foundations for future returns at pace.
WHSmith said it currently expects full year headline group pre-tax profit before non-underlying items to be in line with current market expectations of £75 million to £85 million for the 12 months to August 2027.
Speaking of the transformation programme, Quinn said: “Whilst this is a complex programme, I am confident that delivering it will transform WHSmith over the medium-term into a group capable of generating attractive returns, with significant annual free cash flow.”
