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'Resilient' Christmas trading for W H Smith
25.01.12 | Lisa Campbell
W H Smith has reported “resilient” trading over the Christmas period, with total group sales down by 3% and like-for-like revenues down 5% but profits “in line with expectations”. Retail analyst Nick Bubb said W H Smith had “again delivered the goods”.
In the high street retailer's trading update for the 21 weeks to 21st January 2012, its Travel arm once again out-performed its High Street business.
Total Travel sales were up 2%, but like-for-like sales were down 3%, in comparison to High Street, where total sales were down 5% on the high street and like-for-like sales dropped by 6%. Excluding entertainment, like-for-like sales were down by 4% on the High Street, where “costs were tightly managed, reflecting trading conditions” and gross margin improved in the time period.
The company reported that its store opening programme for the Travel arm remained “on track” with further opportunities for growth in the UK and abroad.
In October 2011, WHS confirmed it had 60 international units in operation or agreed in Australia, India and the Middle East in places such as Hyderabad and Dubai, and last week it was reported the retailer would branch out into Qatar after entering a franchise agreement with Al Meera Holding, a consumer goods company.
This morning (24th January) Kate Swann, WHS group chief executive, said the months of November and December now made up for less than half the group annual profit compared to over 90% of group profit six years ago.
She said: "During the period we saw a resilient performance in challenging trading conditions. Gross margin was in line with plan and costs were tightly controlled.
"Over the past six years both businesses have consistently increased profits and the Group is now well balanced between Travel and High Street… Looking ahead, we expect the trading environment to be challenging however we have planned accordingly and continue to be confident in making further progress in the year.”
WHS did not release any information about the sale of Kobo e-readers and e-books over Christmas, but Todd Humphrey, business development manager for Kobo, said: "Our launch success with W H Smith has exceeded all expectations. With e-readers being the gift of the holiday season, we enter 2012 with tremendous momentum.”
Retail analyst Nick Bubb said WHS had “again delivered the goods” and had narrowly beaten his predicted -7% like-for-like sales drop on the high street by reporting a -6% decline.
“W H Smith always gets criticised for declining like-for-like sales, but never get the credit for engineering a richer sales mix,” he said.
Bubb added the -3% like-for-like decline in the company’s Travel division was “in line with expectations” and reflected “weak airport passenger traffic".
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"Resilient..." how many more euphemisms can WHS find for declining sales and why is Nick Bubb so enamoured of this company?
Good news for a High Street retailer?!
Good for Smiths for focussing on being a cash generative business, whilst Waterstones concentrates on it's apostraphe...
It never ceases to surprise people that WHS can still make a profit, if they could focus on rejuvenating high street stores to make them a more pleasant place to shop . My kids love going there but find it impossible to reach kids books on top shelves. The high islands are just so off-putting but they are in a great position to manipulate their product mix on the high street to recommend, highlight and showcase products that you can browse - and yes people do still want to browse!
The thing is, however hard it is right now in retail, and god knows it's tough, the one thing this company does is turn in a study profit. However hard it will be to ride out the storm - cost cutting left, right and centre - whs seems to be a bit like a cockroach in a nuclear war.... it will survive while those around do not. I just hope our customers understand that while stores look a little ropey, and everything is a little hairy, whs is just tryin to survive in the best way it knows, and staying a profitable company (and by the way, look at the way the share price jumped at this press release, so the market knows a good thing). It's not pretty, but it's business in the middle of a god-almight recession.
Surely one of the reasons WH Smith continues to make a profit is because it charges publishers huge ratecard amounts for placement of their books? And publishers have continued to pay it. I do wonder how much longer publishers will be willing to do this, as they themselves look more and mroe to tighten up on costs. I know we won't be submitting any titles to them next Christmas and having spoken to one or two others, we're not alone.
Give Kate Swann credit for this steady profit growth. I retired in 2004 and like all store managers at this time we were fed up with a lack of concentration in the high street on doing the basics better. Kate as an outsider could see this'd and also on the need to develop travel and get outlets in hospitals and motorway service stations and railway stations and airports where W.H.S. had the monopoly without supermarket competition. She also had the idea to separate the wholesale business from the main business and we can all see the benefit of this as newspaper sales fall as people choose on line reading. How many retailers can boast a leader who has got so much right in the worst times for retail I have ever known in my lifetime. Well done Kate.
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