To some people it’s a great mystery how WH Smith continues to grow earnings at quite aclip. Messy stores, overpriced sweets, newspapers stored in fridges and useless trinkets that collect dust on the shelves seem to point toward a firm going in the wrong direction.
Despite all this, time after time its trading updates and results show that customers see through the chaos and are happy to keep spending in its stores.
“Its high street outlets have typically thrived from ‘crazes’, be that adult colouring books, slime or spoof humour books such as ‘Five Escape Brexit Island’. The latest fad to keep the tills ringing was Platinum Jubilee-related products, with the Queen’s face and Union Jack flags pasted on everything imaginable in a bid to shift units,” said AJ Bell’s Russ Mould.
“The travel shops are easier to understand. The more people return to planes, trains and cars, the more likely they are to visit WH Smith outlets in airports, railway hubs and motorway service stations. Holidaymakers, business travelers and day trippers don’t have the luxury of being able to shop around for the best price as the selection of shops is typically limited. They also need to be able to pick up something in a hurry while they’re on the move – currently an especially rushed experienced for many flyers scuttling between airport security and the departure gate. Therefore, WH Smith can get away with charging more for products because of this captive audience.
“The current UK airport chaos works both ways for the company. On one hand, if your flight is cancelled then WH Smith loses out on potential business. On the other, if you’re already in the airport and find out you’ve been switched to adifferent flight later in the day, you might be stuck and find yourself filling up on Sudoku puzzle books, £8 Toblerone bars and £3 bottles of fruit juice.
“The fact that WH Smith believes its full year results will be at the higher end of expectations comes as surprise given the difficult backdrop for consumer spending. Most retailers are being very cautious about their outlook, so it’s welcome turn of events that WH Smith can be upbeat, albeit recognising the uncertain economic outlook.”