WH Smith seeks acquisitions in the publishing sector

WH Smith, the high street retailer, yesterday confirmed its interest in making further acquisitions in the publishing sector as it seeks to build on its £192m takeover of Hodder Headline last year.

WH Smith, the high street retailer, yesterday confirmed its interest in making further acquisitions in the publishing sector as it seeks to build on its £192m takeover of Hodder Headline last year.

Richard Handover, Smith's chief executive, said the company was looking for "buy and build" deals rather than a big US takeover, as had been previously speculated. "We are not going to do a big, cash consuming deal," he said.

WH Smith said its Hodder Headline deal had been a success with authors such as Stephen King and Rosamunde Pilcher selling well.

Separately Mr Handover said WH Smith was looking to expand its presence in London Underground stations. It already has a store at the North Greenwich station. Other outlets will now be opened in Oxford Circus, Westminster and Stratford tube stations. Smith's is extending its deal with Marks & Spencer, under which it sells M&S sandwiches at its travel stores, to all its 187 outlets in railway stations and airports.

The comments came as WH Smith reported a 5 per cent increase in full year pre-tax profits to £140m. Like-for-like sales in the UK retailing business rose by 3 per cent though sales of books grew by 7 per cent in a market up by only 1-2 per cent. Entertainment sales were 5 per cent down.

Margins rose from 5.8 per cent to 6.5 per cent helped partly buy an increase in higher margin own-brand products which now account for 12 per cent of sales. In current trading underlying sales are up by 5 per cent, the company said.

The news distribution business saw profits dip by £1m to £38m in the year to August as additional costs are incurred as the company develops its controversial national distribution network together with Tesco. Smith's warned that costs would be higher in the current year as the service is rolled out.

Smith's made little mention of its e-commerce activities Losses totalled £7m on sales of £7m. Smith's said it will use its £123m cash pile to restart its share buy-back programme.The shares rose 21.25p to 390p.