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W H Smith has revealed group revenues fell 85% in April compared to last year due to the Covid-19 outbreak, with Travel sales plunging 91% and High Street revenue down 74%. However, online sales “performed strongly” last month with a 400% surge in book-buying.
The disclosure was made in a first-half report that saw group revenues increase 7% to £747m in the six months to 29th February compared to the same period the previous year, with a 19% increase in Travel but a 5% decline for the High Street.
Travel revenues stood at £432m for the six months, representing a 2% increase like for like when acquisitions were stripped out. The High Street was down 4% like for like.
Travel trading profits were up 11% from £44m in the same period the previous year, while High Street profits fell 8% from £48m to £44m.
The firm said it had taken “significant mitigating actions” following the coronavirus outbreak and was “well positioned” for the recovery.
Carl Cowling, group c.e.o, said: "There was very little impact of Covid-19 on our first half results, however inevitably the performance in the second half will be very different. During the first half, we continued to see strong sales growth in our Travel business with total revenue up 19%, driven by our ongoing investment and initiatives in our UK business and our growing international businesses. Trading profit in the first half was up 11%. Our recently acquired US business, MRG, continued to perform well and maintained its momentum of securing significant tender wins across major US airports. Our High Street business also performed well delivering Trading profit of £44m in the period.”
Cowling said an equity placing last month raised £162m and the firm had secured an additional £120m of bank funding.
He said: "We are a resilient and versatile business and with the operational actions we have taken including managing costs and the new financing arrangements, we are in a strong position to navigate this time of uncertainty and are well positioned to benefit in due course from the normalisation and growth of our key markets."
The report said 203 stores remained open in the High Street, with around 130 hospital-based shops open and extending their grocery range.
Distribution centres remained operational at a reduced capacity and there had been a “significant reduction in headcount across stores and head offices through furlough arrangements”. It had also reduced stock purchases to reflect ongoing demand, "returning sale or return stock and negotiating extended payment terms".
The company said its focus for the second half of the financial year would include managing costs, the phased re-opening of stores and driving spend per passenger at its Travel branches.
Following the report, analysts at JP Morgan said the firm's immediate future seemed secure, despite the crisis. They said: "The company has taken steps to conserve cash, increase liquidity and reduce costs, including the use of furlough schemes. With £400m of available liquidity and a monthly cash burn of £25-30m before furlough savings, we believe W H Smith has the capacity to withstand an extended period of close to zero income, well into 2021."