March 25, 2023

WH Smith hailed an impressive start to the fiscal year as a recovery in travel over the festive period provided a windfall for the group’s outlets.

Turnover soared 41 percent in the 20 weeks ending January 14, compared to last year, when trade was hit hard by the reimposition of Covid-19 restrictions in response to the emergence of the Omicron variant.

Easing lockdown rules and skyrocketing airport sales helped boost revenue at the group’s UK travel division by 70%, as did the strong performance of its hospital stores and the technological accessories brand InMotion.

Recovery: Easing stay-at-home rules and skyrocketing airport sales helped WH Smith’s UK travel division surge revenue by 70% in the 20 weeks ending January 14 .

During the same period, travel sales grew by nearly a third in North America, while they nearly tripled in the rest of the world as the group opened new locations in cities including Brussels, Belgium and the Malaysian capital Kuala Lumpur.

Total revenue was also 20% higher than 2019 levels, though slightly lower on a like-for-like basis, as airline and rail passenger numbers remain significantly below pre-pandemic volumes.

Widespread flight cancellations and delays have stifled the recovery at the group’s airports, especially in the UK and Europe, as labor shortages have left airlines struggling to cope with a resurgence in travellers.

At the same time, the flow of people at major British passenger hubs has been hit by a pandemic-induced increase in people working from home and a series of strikes over pay and working conditions by rail staff.

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Nonetheless, WH Smith said that global passenger volumes continue to recover even against a backdrop of heightened economic uncertainty.

Having launched 40 new stores since early September, it has bids to open another 130 locations, including Reagan National airport in Washington DC and Palm Springs in California.

Chief Executive Carl Cowling said the company was “in its strongest position as a global travel retailer” following impressive results and winning new bids.

He added: “This strength, combined with continued improvement in passenger numbers around the world, means we are confident of another year of significant growth in 2023.”

In November, WH Smith reinstated its dividend after revealing that its annual earnings had marginally eclipsed expectations and as a reflection of confidence in its future performance.

The FTSE 250 group had suspended payments to shareholders two years earlier when it was forced to close most of its venues in the face of the outbreak of the pandemic.

As trade restrictions were eased, demand picked up more quickly in the group’s core business, partly due to increased sales at its online brands such as greeting card seller

However, during the most recent reporting period, the division’s comparable sales stagnated and remained 10 percent below pre-pandemic levels.

AJ Bell’s chief investment officer, Russ Mold, said: ‘For years the UK high street operation has been something of an afterthought, run as efficiently as possible with firm control of costs.

“At some point, a debate about the role of the business division in the broader group may start to heat up, and investors may look to sell or spin off a business that has very different growth prospects.”

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W.H. Smith Stock they were 2.2 per cent lower at £15.82 on Wednesday afternoon, though their value has still grown by more than a third in the past three months.

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