WHSmith reports profit fall amid Middle East uncertainty
WHSmith has said it is adopting a cautious outlook due to uncertainty in the Middle East as it reported a drop in first half profit despite an increase in revenue.
In the six months to 28 February, total group revenue increased by 5% to £748 million following respective growth of 2% and 10% in the UK and North America. Revenue growth in the rest of the world was 8%.
Subscribe to TRBThe travel retailer said its performance in the UK was impacted by disruption following the refurbishment of several large airport stores and inflation headwinds.
In the US, it benefited from a strong performance at travel essentials stores where revenue increased by 22%.
However, headline group profit before tax and non-underlying items came in at £3 million compared to £21 million in the same period in the prior year.
Headline group trading profit was £32 million compared to a previous £47 million.
Leo Quinn, WHSmith executive chair, said: “The immediate focus is to restore confidence and ensure the right foundations are in place to support profitable growth and long‑term value creation.
“Moving forward, the board and management team will have a relentless focus on driving cash, cost discipline and strengthening the balance sheet. As a first step, the board has taken the prudent decision to suspend the dividend.
“This is a business with a strong brand and proposition in high‑footfall travel markets and the new flagship stores opened across Heathrow airport are raising the global standard for travel essentials retail.”
In light of uncertainty arising from the conflict in the Middle East, WH Smith said it is taking a more cautious outlook due to the impact on passenger numbers and consumer confidence. At this stage, it expects to deliver headline pre-tax profit before non-underlying items of between £90 million and £105 million in the current financial year.
Quinn said: “While the near-term outlook is uncertain, I am confident that, with the right focus and discipline, the business can deliver superior returns for the benefit of our colleagues, partners and shareholders over the longer-term.”
