'Poor year' leaves WH Smith £135m in red

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The Independent Online

The ailing retailer WH Smith today unveiled annual losses of £135 million following an "unacceptable performance" by its high street business.

The ailing retailer WH Smith today unveiled annual losses of £135 million following an "unacceptable performance" by its high street business.

The figure for the year to August 31 compared with profits of £52 million a year earlier and included around £200 million of exceptional items.

Stripping out the one-off costs, WH Smith said underlying profits fell to £67 million from £102 million a year earlier.

That reflected a 1 per cent fall in like-for-like sales in UK retail as the core division, which consists of 673 stores, faced up to intense competition from supermarket rivals.

Chief executive Kate Swann recently unveiled a turnaround strategy for the group but said today's results reflected a "poor year" for the group.

She added: "The high street retail business delivered an unacceptable performance following weak Christmas trading, which highlighted the operational shortcomings and underlying strategic challenges to the business."

WH Smith said current trading had been in line with expectations with the high street retail division's like-for-like sales down 2 per cent but margins up.

Since taking over, Ms Swann has boosted core ranges of stationery, cards and magazines and sought to "reinstate sound retailing disciplines".

However, she warned much still remained to be done and that the group expected to face tough competition in its core markets over Christmas.

The group has also sought to simplify its business by selling a series of overseas operations and its Hodder Headline book publishing arm.

That will leave it focused on UK retail, which generated sales of £1.45 billion, and news distribution, where turnover benefited from a number of new magazine launches to rise 6% to £1.18 billion.

Operating profits at UK retail were 51% lower at £44 million, although the performance for news distribution showed a 9% rise to £35 million.

Among the exceptional items booked today, WH Smith took a £45 million hit from writing down the carrying value of stock in UK retail.

There was also a £61 million exceptional charge from the disposal of the US operations, while £10 million stemmed from a restructuring of the company's Swindon and London head offices.

Today's figures prompted the group to slash its full-year dividend to 12p a share, from 19p a share a year earlier.

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