WH Smith, the books and newsagents group, moved a major step closer to sorting out its woes yesterday, announcing it would exit the United States market after 16 years by selling its loss-making chain of shops in hotels and airports.
The UK company said it would net $78.5m (£49m) from the disposals, sending its shares up 8p to 365.5p. WH Smith has been under pressure to sell the business for some time, clearing the way for its incoming chief executive , Kate Swann, to focus on boosting profitability and sales in the competitive UK newsagents market.
The company issued a profit warning three weeks ago as its domestic business was hit by cut-price music sales and a heatwave that kept shoppers at home. WH Smith's operations in the US proved to be a drain on the overall group after the 11 September 2001.
WH Smith said the deal would be significantly earnings enhancing. While it will take a £7m charge to close its US head office in Atlanta by February, that facility cost £20m a year to run.
The company's US hotel retail division has been acquired by its former management for £8m. The total consideration for the 280 stores, located in hotels in the US and the Caribbean, will be paid via an interest bearing loan carrying a 5 per cent coupon. WH Smith will hold a 15 per cent stake in the company acquiring the assets, which it is also lending £4m.
WH Smith sold its 180 stores located in 23 US airports to the Hudson Group for £41m, of which £25m is to be settled in cash. The stores generated sales of £133m in the year to 31 August 2002.