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
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
science
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before