WH Smith to launch ebook reader

Retail chain WH Smith made its first move into the electronic books market today by sealing a distribution deal with Canadian group Kobo.

Analysts have expressed concern about the impact of electronic books on physical book sales, but chief executive Kate Swann said the move, which will see Smiths sell electronic readers through its stores and website for the first time, would "complement" its traditional print books business.

Customers will have access to the largest eBook catalogue in the UK through the deal with more than 2.2 million titles and one million free books, while Smiths will sell two versions of the Kobo electronic reader.

Smiths announced the deal alongside a 4% increase in profits to £93 million in the year to August 31 despite like-for-like sales falling 5%.

Book sales fell by 4% but the travel business, situated largely in airports and railway stations, produced record profits.

Cost savings also enabled the high street outlets to offset the general retail woes and increase their profit contribution by 2%, despite same store sales dropping by 6%.

Smiths made £14 million of cost savings at its high street arm, £3 million more than expected, with a further £11 million pencilled in for the next two years. The extra savings will come from better energy usage, new technology and making the supply chain process more efficient.

The company, which has 612 high street stores, said profits were helped by its focus on core areas such as books, news and impulse buys, rather than lower margin DVDs and CDs.

Travel profits rose by 8% to a record £57 million, though like-for-like sales fell as passenger numbers were hit by the tough economic climate.

The group, which has 561 travel stores, opened 35 new outlets in the UK and intends to open a further 35 in the current year. The international travel business has 60 outlets, with 25 scheduled to open over the next 12 months.

Smiths also opened four trial stand-alone stores for its Funky Pigeon personalised greetings card business, with another five expected to launch in the current year.

Analysts said the results were solid, with the 16% increase in the annual dividend better than expected.

Kate Calvert, a broker at Seymour Pierce, said the results showed the business had been turned into a sustainable growth story through its travel arm.

PA