WH Smith slumps to a loss as pandemic hits sales
WH Smith has reported a hefty annual loss after the coronavirus outbreak and lockdown measures forced hundreds of its shops to close earlier this year.
Travel restrictions amid the pandemic have also hit revenues at its outlets in railway stations and airports.
For the year to 31 August, the retailer reported a pre-tax loss of £226m, down from a £135m profit last year.
In April, WH Smith’s sales sank to just 17% of those made in 2019, although by October this had recovered to 59%.
The rebound was led by a recovery in sales at its High Street stores, but revenues at its travel business still remain at less than half the level they were a year ago.
Group revenues in the year to August fell by a third to just over £1bn.
“WH Smith’s High Street business was already facing an uphill struggle with the company heavily reliant on growth through its convenience shops dotted across the transport network,” said Susannah Streeter, an analyst at stockbroker Hargreaves Lansdown.
“But this captive market where shoppers made impulse purchases as they waited for trains and planes, or scanned a grab-and-go sandwich on their daily commute, all but evaporated during the pandemic.”
In August, the retailer warned that it might have to cut 1,500 jobs as a result of the slump in sales.
Announcing the latest results, WH Smith chief executive Carl Cowling said the business was “resilient and agile”.
“The actions we have taken have put us in a strong position to navigate this time of uncertainty and we are well positioned to benefit as our markets return to growth.
“In High Street, we had seen a steady recovery and we were well set up both in stores and online as we went into the second lockdown. We currently have 558 stores open.”
Like many businesses, the company’s shares were lifted earlier this week by the positive preliminary findings of tests of a coronavirus vaccine, developed by Pfizer and BioNTech.
Its shares finished last week at £10.29 each and are now trading at about £14.60. However, they are still well below levels seen earlier this year, having traded at above £26 in January.
A bright spot for its travel retail business is in the US, said Mr Cowling.
“While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85% of passengers are domestic, is beginning to see some encouraging signs of recovery.
“In addition, we continue to open new stores in the US and win significant tenders across major US airports.”