WH Smith chief rules out early break-up plans

W H Smith's chairman, Jeremy Hardie, ruled out a break-up of the struggling retail group yesterday, saying the appointment of a new chief executive remained the priority. Speaking as W H Smith announced a rebound in full- year underlying profits to pounds 124m, Mr Hardie said the company would stick to the strategy developed by Bill Cockburn, whose shock decision to quit as chief executive in June plunged the group into fresh turmoil.

"We have no plans for a break-up," he said. "A year ago we had a strategic review and disposed of some assets such as Do It All and business supplies. The strategy we developed then is being implemented now. What you don't do is thrash about changing things."

Mr Hardie admitted that he could not dismiss a break-up entirely as the incoming chief executive may view the situation differently. However, he said none of the candidates interviewed for the post had expressed a different view as to the company's best method of rebuilding shareholder value.

Mr Hardie, who has been spending all his time at the company even though he is supposed to be part-time chairman, disappointed the City by giving precious little fresh information about the chief executive search. "It is only two months since Bill Cockburn left and if you are going to do a professional job it takes longer than that. You don't find a chief executive by looking at the small ads overnight." He said the interviews had been completed but did not rule out additional candidates coming forward.

At present the leading external candidate is Stuart Rose, the former Burton director. The three internal candidates are Alan Giles, John Hancock, and Richard Handover.

Keith Hamill, the group's finance director who was considered a front- runner prior to his decision to pull out at the weekend, said he was happy to work under someone else and had no plans to quit. "I'm quite happy here. I'm not roving about talking to headhunters."

He denied he had canvassed support for a break-up but admitted that he had been "quite loud" about the company being under-valued when the shares fell to 350p.

Some analysts say the group could be worth more than its current market value of just over pounds 1bn if parts of the group such as the Waterstones books division and Virgin Our Price, were sold.

Mr Cockburn, who joins BT as head of its UK operations in October, will not return to Smith's after taking August as holiday. However, he telephoned the company yesterday saying he would waive his September salary, worth around pounds 35,000.

WH Smith's pre-tax profits of pounds 124m for the year to 31 May followed the previous year's pounds 194m loss, which was struck after heavy exceptional items.

However, there were fresh problems in the main WH Smith retail business, where the group was forced to make a pounds 6m provision for pounds 20m of excess stock. The company said the unsold books, music and videos were a result of over-buying and a failure to mark poor sellers down soon enough.

Mr Hardie said he was confident that the business could be turned around. "There is a big market for a mainstream store providing music, books and so on, regardless of the inroads the specialist retailers and supermarkets are making."

There was also a pounds 73m pension write-off caused by the recent changes to Advance Corporation Tax in the Budget.

Like-for-like sales at the core business rose by just 1.5 per cent last year and by 2 per cent in current trading.

In the rest of the business, Waterstones remained the star performer, increasing profits from pounds 15m to pounds 20m. But profits at Virgin Our Price fell from pounds 18m to pounds 14m due to a weak roster of music releases.

Group sales were up 4 per cent at pounds 2.75bn and the dividend was maintained at 15.65p. The shares closed 9p higher at 376.5p.

Comment, page 17

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
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: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent