Week ahead: Sell-offs could be the key to a comeback by struggling WH S mith

WH Smith, one of the dinosaurs of the high street, may provide more details of its desperate bid to recapture past glories when it produces interim figures on Thursday.

Like so many proud retailers with a long and distinguished history, Smith has been slow to accommodate the more demanding attitudes of customers and meet the superstore challenge.

Last week its arch-rival in the high street, John Menzies, tossed in the retailing towel. It intends to dispose of its 232 Menzies stores, selling confectionery, greeting cards and newspapers, probably to the management in a pounds 50m buyout backed by Alchemy Partners. The Early Learning toy shops are to be demerged as the old established group concentrates on distribution.

Smith has more than 400 branches, far too many in the view of some observers. It would not be surprising if it cut back its retail spread, although indications are that sales have been encouraging with a 5 per cent like- for-like increase in the Christmas run-up.

Since Richard Handover got the job as chief executive in September, Smith's shares have made headway although they remain sad under-performers.

There has been no shortage of action during Mr Handover's brief reign. Tim Waterstone, founder of the Waterstone's book shops chain, has, with SBC Warburg, made an audacious but predictably unsuccessful takeover approach. Smith is the current owner of Waterstone's.

But things have moved on since then. Mr Waterstone, with the EMI showbiz group as a partner, is now negotiating to buy Waterstone's and it is likely a deal will be clinched before long.

EMI plans to merge Waterstone's with its Dillons book shops, creating the nation's largest books chain, and the HMV record stores. Mr Waterstone, sacked by Smith, will, therefore, assume control of his old books empire.

Eventually EMI intends to float the retailing business, possibly retaining a significant minority stake.

Mr Handover could also be near to giving up control of the Virgin/Our Price records chain. Smith has 75 per cent, with Virgin sitting on the remaining 25 per cent. Although it has an option to buy full control there is now every chance that a sale, perhaps even a demerger, is on the Smith agenda.

Virgin made a pounds 135m bid for Smith's controlling stake a year ago. It was rejected by the then chief executive, ex-Post Office supremo Bill Cockburn who subsequently decamped to BT.

The sale of Waterstone and Our Price, together with other bits and pieces, could produce a pounds 500m-plus windfall, paving the way for a cash handout to shareholders.

If the sale programme goes as expected Smith will be left more or less how it spent most of its 200 years, distributing newspapers and running shops. It is aware of the uphill struggle it faces on the retail front as the superstores draw away its traditional customers.

Retail strategy is being completely overhauled and various concepts considered. Stores are being refitted, delivering sales growth of up to 14 per cent in larger branches.

Unlike Menzies, the Smith philosophy is to develop its retail spread, giving more space to books, stationery and newspapers. The obligatory loyalty card club, launched in July, has been well received and already embraces 1.5 million members.

In the meantime, Thursday's interim profits are likely to be an unexciting pounds 40m. For the year to the end of May around pounds 140m is likely.

Charterhouse Tilney analysts Mark Charnock and Iain McDonald believe Smith shares could be worth up to 500p. "We expect sentiment towards the shares will continue to improve," they say.

As Smith has struggled to get on top of its problems its shares have been as low as 324p. They ended last week at 431p.

Retailers invariably dominate the opening weeks of the year and they remain conspicuous this week, with Allied Carpets and UNO also offering interim figures.

Northern Rock, the building society turned bank, is another to get in on the results act. It will report last year's results on Wednesday and around pounds 200m is expected against pounds 157m last time.

The accountants at Northern Rock are certainly on the ball. It will have taken them just 28 days to add up their figures - an example to others who often sweat for many months performing the same chore.

The old building society's shares have had an outstanding run since they arrived in October. Opening price was 463p; they ended last week at 612p. Not bad for a company described as "boringly consistent" by its chief executive, Adam Applegarth, at the time of the flotation.

Naturally takeover stories have swirled. But rumour has yet to become reality.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
ebooksA celebration of British elections
  • Get to the point
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: 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...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'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
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
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
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk