WH Smith rules out disposal of American arm despite fall in profits
WH Smith has ruled out the sale of its loss-making American operation but says it will not invest any more in its US hotel stores after a sharp fall in sales.
Reporting an 8 per cent drop in full-year profits to £122m, the company's chief executive, Richard Handover, said: "We are committed to the US business, particularly the airports business. But we are not investing in the hotels business right now.
Smiths has more than 500 US stores, which have been hit hard by a downturn in travel after 11 September. Forty stores have been closed as a result with a handful more to follow.
While the company is happier with its 174 US airport branches, it is more concerned with the 354 stores in American hotels which are small, have weak branding and sell ranges such as T-shirts for tourists which do not fit so well with the company's strategy.
Mr Handover said the US business was "recovering" though it is "still way down from where we would like it to be. It's a question of how long it will take to come back."
The US stores lost £16m in the year and Smiths took a £28m asset write-down on the value of the business. The group will also be hit this year by a £16m increase in pension contributions to make up for a substantial deficit due to the sharp fall in stock markets.
In the UK, retail profits were up 7 per cent to £97m though there has been a slowdown in sales. Like-for-like sales in the year to 31 August were up by 4 per cent on the previous year but this has slowed to 1 per cent in current trading, although the margin is up.
Smiths said its market share in UK books was up 0.5 per cent to 17.2 per cent.
US sales are up 13 per cent in current trading but still down 15 per cent on the figure two years ago.
The shares rose 13.5p to 342p yesterday.
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