WH Smith saw strong sales from its Zoella Book Club launch over summer, but general book sales were down 2% like-for-like for the retailer in the year ending 31st August 2016.
The company posted its annual financial results this morning (13th October) revealing that group sales were up 3% to £1.21bn over the last year, while like-for-like sales rose 1%. At the same time, the group achieved an 8% rise in pre-tax profit to £131m and announced it would buy a further £50m in shares from investors after completing a £50m share buyback programme.
In books, WH Smith reported it had seen “good” sales from its Zoella Book Club launched in June, which the company said “strengthens our recommendation credentials which is key for WH Smith books customers in both Travel and High Street,” alongside book clubs with Richard and Judy and its Fresh Talent promotion. However, despite the boost from Zoella’s book club, book sales at retailer were still down by 2% like-for-like.
Children’s titles remain its “most resilient category” and as such the space it gives to kids books reflects this, the retailer said. While it noted there is “some stability in the general retail market” for books, the quality of publishing is still “the biggest driver of market performance”. The retailer performed strongly with adult colouring therapy titles in the first half of the year, but added: “However in the second half we started to annualise the strong publishing from last year.”
“The penetration of e-books is showing no growth”, WH Smith added.
“Our approach to the books business is to focus on areas of market growth, build on our areas of strength and drive the overall net profitability of the category,” WH Smith said. “We saw good sales from the launch of the Zoella Book Club. Alongside the Richard and Judy Book Club and our Fresh Talent promotion in Travel, the Zoella Book Club further strengthens our recommendation credentials which is key for WH Smith books customers in both Travel and High Street."
Continuing its usual pattern, WH Smith's Travel arm performed better than its High Street business, with total sales up 10% year-on-year and like-for-like sales up 4%, reflecting “the impact of our key initiatives as well as improved passenger numbers”. Trading profit in the Travel arm increased by 9% to £87m at the same time - £7m of which came from its growing international channel, up by £2m from last year.
The High Street arm delivered “another good performance,” the company said, with trading profit up 5% to £62m. However, total sales were down 3% and down 2% on a like-for-like basis, which it linked to a drop in “colour therapy” titles.
Stephen Clarke, group c.e.o of WH Smith, said: “We have delivered a good performance across the group with earnings up 10%. Our Travel business continues to perform well with strong sales across all channels and profit up 9%...In the High Street business, our profit focused strategy continues to deliver sustainable growth with profit up 5%. Stationery sales have been strong in the year and in books we are delighted with the success of the Zoella Book Club which launched during the summer.”
He added: “Looking ahead, we will continue to focus on profitable growth, cash generation and investing in new opportunities. While the economic environment is uncertain, we are well positioned for the current year and beyond."