Home Business NewsBusiness WH Smith dips despite reassuring update

WH Smith dips despite reassuring update

by LLB Reporter
7th Sep 22 9:50 am

After June’s impressive trading update, expectations were perhaps running too high for WH Smith, with investors today seemingly disappointed it hasn’t raised guidance once again in its latest update.

Given the fragile nature of the retail sector, the fact it remains on track must be seen as a positive, particularly when you consider that plenty of other companies on the high street or selling goods online have started to show cracks, with profit warnings creeping out.

WH Smith’s business model is split into two – one part is to generate as much cash as possible from the high street stores and just keep them ticking over without expecting too much growth. The other, more exciting, part is to use the travel shops as the growth engine for the group.

AJ Bell’s Russ Mould said: “The fact travel sales are now above pre-pandemic levels is very encouraging as it shows its strategy of rolling out new stores and reengineering existing ones to include broader categories such as health and beauty is working.

“There are still some levers it can pull to enhance the financials from the high street shops such as find more places to cut costs including deals with landlords to cut rent. The travel business is all about being clever with the floor space and planting as many new flags as possible around the world.

“For a business that most people associate with selling the Radio Times and a big packet of felt tip pens, there’s no getting over the fact that it has managed to move with the times and turn a seemingly tired brand into an ever-expanding retail group.”

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