WH Smith reports lift in profits

Retail chain WH Smith reported an 8 per cent rise in annual profits today as it overcame falling sales at its travel and high street divisions.

The haul of £81 million in the year to August 31 was achieved despite a 5 per cent drop in like-for-like sales, with total revenues off £12 million at £1.34 billion.

The retailer said its travel division, which operates from 490 sites at airports, railway stations and motorway service areas, grew operating profits by 17 per cent to £48 million. Cost controls and improved margins drove the performance as like-for-like sales were down 2 per cent due to the impact of lower passenger numbers.

High street operating profits were up by £2 million to £49 million, despite a 6 per cent drop in like-for-like sales.

Under the leadership of chief executive Kate Swann, the company has reduced its reliance on the highly competitive entertainment market, including CDs and DVDs. It is now focused on its core books, stationery and confectionery markets.

High street like-for-like sales were down 2 per cent when stripping out entertainment sales. Margins in the division improved due to better buying terms, improved product sourcing and greater control of promotional activity.

The division now operates from 565 stores.

Ms Swann said the company had delivered "another strong performance." She added: "Operating performance was ahead of our expectations in both our travel and high street divisions."

The company said it will return £35 million of cash to shareholders through a rolling share buyback programme, while its final dividend has been increased by 16 per cent to 11.3p a share.