WH Smith's new chief executive, Bill Cockburn, pledged yesterday to shake up the company's sleepy, under-achieving culture in a series of moves that could involve large-scale redundancies at the beleaguered retailer.
Announcing a slump in half-year profits from pounds 45m to pounds 17m, Mr Cockburn criticised poor cost control and weak accountability, saying the company needed to hit targets and budgets "rather than conjuring up excuses for missing them".
He said that the profit performance was ''unsatisfactory'' and warned that second-half profits were unlikely to exceed last year's pounds 70m. Describing the company's culture as "cosy and complacent", he said: "Sometimes you get that in old mature businesses that think they have a God-given right to survive." Mr Cockburn declined to give details on possible job cuts but said: "If that's what's necessary, that's what will be done." WH Smith has 23,000 workers world-wide, of whom around 20,000 are in the UK.
Mr Cockburn, who joined WH Smith from the Royal Mail at the beginning of the year, said he wanted the group to capitalise on the strength of its brand name and to be more pro-active. It should be able to take advantage of the collapse of the Net Book Agreement, which used to govern book prices. The group has increased book sales by 9 per cent since the end of the agreement in October.
Analysts praised Mr Cockburn's sentiments but said he needed to address the problems at Do It All, the group's DIY joint venture with Boots, which recorded a loss of pounds 7.7m in the six months to 2 December and sales 3.2 per cent lower than the same period last year.
Mr Cockburn refused to be drawn on details ahead of his strategic review, which will not be completed until the spring.
WH Smith's profits for the six months to December were down from pounds 45m to pounds 17m. Sales rose from pounds 1.2bn to pounds 1.3bn.
Operating profits at the core WH Smith chain fell from pounds 26m to pounds 12m, partly due to previously announced provisions. The chain has struggled against competition from the specialist music and booksellers and the supermarkets. Like-for-like sales were 2.6 per cent higher.
Profits at Waterstones, the bookseller, improved from pounds 3m to pounds 5m while Virgin Our Price, the music and video chain that makes most profit in the second half, reported profits of pounds 1.6m, compared with a loss of pounds 800,000 last year. The interim dividend was maintained at 5.25p.The shares were unchanged at 407p.
Investment Column, page 18Reuse content