WH Smith boosted by travellers' stores
Thursday 09 October 2008
A strong performance at its motorway, airport and station stores helped WH Smith report a 15 per cent hike in underlying full-year profits today.
The group posted a surplus of £76 million for the year to 31 August, which was marginally better than expected in the City.
Sales at its 449 store travel portfolio rose 3 per cent on a like-for-like basis excluding tobacco, helping offset a 3 per cent decline in comparable sales within the high street business.
WH Smith said it had also met cost cutting targets, saving £8 million over the year, with another £10 million due to be trimmed.
The group said it expected a "competitive Christmas trading season", but hoped to buoy business with the roll-out of six more standalone book stores before the end of the year at airports, taking its total to 15.
It is also launching a new postal service in 400 existing stores with express carrier DHL, targeted largely at the eBay users market.
WH Smith introduced the first DHL postal point yesterday, allowing customers to buy pre-packaged boxes and put them in secure in-store collection points to be sent out.
It will begin introducing the service across its other stores this autumn.
Kate Swann, group chief executive of WH Smith, said travel stores continued to see a drop in sales of tobacco products as a result of the ban on smoking in enclosed spaces - with sales up 1 per cent when including tobacco.
She added that the group had seen trade at airports ease back amid a slowdown in air travel, which has been hit by the recent record oil prices and collapse of firms such as XL Leisure.
However, the group pays rent at airports based on a percentage of sales, which she said would limit the bottom line impact.
Despite the drop in like-for-like sales at the group's high street arm, WH Smith said underlying profits within the division rose 7 per cent to £47 million.
A decision to focus on higher margin products - resulting in a switch away from relying on entertainment - helped bolster profit margins, as did tight controls on costs, according to the group.
WH Smith is expecting a good festive season for book sales, with a strong line-up of new releases, including comedian Alan Carr's autobiography and a new 3D Guinness World Records book.
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