Loss of pounds 195m in WH Smith shake-up

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The Independent Online
WH Smith confirmed its worst figures in its 204-year history yesterday and warned a recovery would take time. Reporting a pre-tax loss of pounds 195m in the year to June due to heavy re-structuring charges, new chief executive Bill Cockburn said current trading was "patchy".

Strong sales of books, papers, magazines and stationery products have been held back by weaker performances from music, videos and computer games which have been affected by fewer quality releases.

Mr Cockburn said that the Euro '96 football championships had not helped, robbing the shops of valuable trade on two Saturdays. The company also announced that Simon Burke, managing director of Smith's Virgin Our Price subsidiary, was leaving the group to run Virgin's retail and cinema business world-wide.

WH Smith's main problem remains its core high-street chain where profits fell 27 per cent on sales just 2 per cent higher.

Mr Cockburn, who joined the company from the Post Office in January, maintained that WH Smith still had a place on UK high streets and would survive the onslaught from supermarkets and specialist retailers.

"Our brand name is instantly recognisable and I think it's got a lot of puff left in it. There is no evidence that the supermarkets are taking us to the cleaners."

The figures received a cautious welcome in the City with most analysts saying the jury was still out on the prospects for a WH Smith revival.

WH Smith recorded a pre-tax loss of pounds 195m in the year to June compared with a pounds 115m profit in the previous year. Group sales on continuing operations were marginally ahead at pounds 2.7bn. The figures were scarred by pounds 283m of exceptional items which were announced in June.

These related to the disposal of its half-share in the Do It All DIY chain to Boots, the cost of 400 redundancies, stock write-offs and other asset write-downs.

WH Smith retail saw profits fall from pounds 65m to pounds 47.6m on sales of pounds 927m. Like-for-like sales were up by just 2 per cent.

Virgin Our Price increased profits from pounds 11m to pounds 16m following the opening of 20 new Virgin Megastores. Waterstone's, the booksellers, increased profits by almost 50 per cent to pounds 12.8m.

Investment in The Wall, the US music chain, will be suspended until an expected shake-up of the sector takes place. WH Smith shares fell 5.5p to 414p.

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