WH Smith ready to check out of US hotel shops

WH Smith signalled yesterday that it is preparing to retreat from its loss-making US hotel shops business after it was forced to take a further £35m hit to cover the collapse in the American travel market.

Richard Handover, the chief executive, said the group was "examining and reviewing all options" with regard to the US, "in particular about the hotel business, which is not strategic long-term for us."

The high street retailer revealed that its US arm, which includes more than 300 shops in hotel lobbies and 173 outlets in airports, made an operating loss of £9m in the six months to end-February. The new impairment charge comes on top of a £27m write-down taken in the previous financial year.

The group said the war in Iraq and concerns over the outbreak of the Sars virus were to blame for an 8 per cent fall in like-for-like sales across its US businesses in the six weeks to 12 April. It shut 33 hotel stores in the first half and has earmarked another 20 for closure. Mr Handover said he would make a further announcement about the future of its US operations "in the next few months".

Nick Bubb, an analyst at Evolution Beeson Gregory, said: "They are going backwards even though the comparisons are soft. They are having to cut central costs pretty hard just to stand still." Richard Ratner, at Seymour Pierce, said: "It appears to us that the company has decided to withdraw from the hotel business but keep the airport business for the time being and that losses next year will be much lower as a result."

After a bad Christmas for the group in the UK, where a strategy of focusing on building margins meant it lost market share, it said like-for-like sales in the six weeks to 12 April had recovered to rise 3 per cent. This was driven by a 7 per cent increase in underlying book sales after the retailer introduced a three-for-two offer on fictional books.

Smiths, which also has a UK news distribution arm and a publishing division, said profit at its core UK retail business was broadly flat at £83m in the first half. Overall, group profit before tax fell £6m to £54m although before the exceptional charge it edged up by £2m to £91m. Sales during the period were £1.56bn against £1.58bn a year earlier. The shares closed up 1.75p at 296.5.

Mr Handover said the group had taken 25 per cent out of its costs at its US head office in Atlanta. He noted that the hotels business, which the group acquired in 1986, had been profitable for the first 15 years. Sales in the outlets, which mainly sell souvenirs, have plummeted in line with the downturn in the leisure market since 11 September.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral