Virgin Mobile to set up shop at WH Smith stores

WH Smith pressed ahead yesterday with its plans to sublet spare space in its stores to specialist retailers, striking a deal with Virgin Mobile that will see the newly listed mobile phone group set up shop in eight of the newsagent's outlets.

WH Smith pressed ahead yesterday with its plans to sublet spare space in its stores to specialist retailers, striking a deal with Virgin Mobile that will see the newly listed mobile phone group set up shop in eight of the newsagent's outlets.

The agreement follows WH Smith's revelation last month that it intends to open coffee bars in some of its larger stores. Yesterday it said Whitbread's Costa Coffee had won the right to open 20 concessions.

Analysts queried the plans, which contradict the stated aim of the new chief executive, Kate Swann, to return the retailer to its bookselling and newsagent roots. Paul Smiddy, at Robert W Baird, said: "I think it will further confuse consumers as to what WH Smith stands for."

Virgin Mobile will open eight outlets from next month, in stores including Croydon, Leicester and Guildford. If the one-year trial is successful, it will have the option of extending the concept to 500 stores.

Separately, some of WH Smith's biggest shareholders expressed concern at a management incentive plan that could hand £8.5m to the top executives in three years' time. One institutional investor said it had expressed reservations over the structure of the scheme, which shareholders can vote on this month.

The Association of British Insurers said the arrangements were "reasonably well thought through".