WH Smith has revealed it will be closing six loss-making high street stores, as well as "winding down" non-core initiatives including its WH Smith Local convenience outlets, launched in 2013, and its 20-strong Cardmarket chain, once the leases expire.
For the year ended August 2018, the retailer reported revenues overall for the group were up 2% at £1,262m (2017: £1,234m) with group like-for-like revenue flat compared to last year, while group pre-tax profit was down 4% at £134m (2017: £140m). Without disclosing the revenue, the chain said it had also experienced a 6% drop in like-for-like revenue for its books business, citing a "challenging" Christmas period in 2017 with the lack of a strong new publishing trend.
Stephen Clarke, WH Smith's group chief executive, said the retailer had put in "a good performance" across the group "despite challenging trading conditions", driven by ongoing investment in stores and growth in passenger numbers. Travel, which accounts for over half of WH Smith's sales and two thirds of its profits, grew sales 8% (3% like-for-like) and increased trading profit 7% to £103m. High Street revenue was however down 3% (also down 3% like-for-like) with trading profit similarly down 3%, to £60m.
As a result of what it refered to as "the challenging conditions being experienced on the high street more generally", it said it had undertaken a detailed review of its High Street businesses "to ensure they remain fit for purpose now and for the future". Plans to close six of its 607 high street stores, as well to wind down non core trial initiatives including Cardmarket and WHSmith Local and restructure some operational activities, were subsequently decided on to "better structure the business for the future".
The six loss-making high street stores selected for closure have not been named. A WHSmith spokesperson commented: "Over the year, WHSmith will be opening more stores than it is closing. Across the business we will continue to create jobs, employing more people next year than this year. We are not announcing the six stores we have earmarked for closure in today’s statement as they will close at different times as and when their leases expire - the earliest of these will be in 2021."
WH Smith's annual report read: "Cost savings of £12m were delivered in the year. An additional £10m of cost savings have been identified over the next three years making a total of £19m of which £9m are planned for 2018/19."
In terms of the retailer's books business, like-for-like revenue was down 6%. The company said "the quality of publishing is still the biggest driver of market performance" and commented the Christmas period had been "challenging" in books, particularly given the success of colour therapy titles and spoof humour books over the past two Christmas periods. It rallied in the second half however, it said, driven by "a good performance" from titles such as David Walliams' Worlds Worst Children 3 and Dan Brown's Origin.
WH Smith commented that its approach to the books business "goes unchanged". "We will continue to build on our areas of relative strength to make WH Smith High Street the home for lighter readers, kids and educational books while at the same time driving the overall net profitability of the category by improving the efficiency of our books operating model. In Travel, we are making good progress with our standalone bookshops and customer feedback has been excellent. E-books continue to decline across the market," the company said.
WH Smith's board has proposed a 13% increase in the final dividend announced a further share buyback of up to £50m. Clarke commented: "While there is some uncertainty in the economic environment, we are pleased with the start to the new year in both businesses [Travel and High Street], and will continue to focus on profitable growth, cash generation and new opportunities to profitably invest for the future. We are well positioned for the current year and beyond."