UK's WH Smith Says Expects Small Improvement In 2021 performance
British retailer WH Smith expects a small improvement to its performance in the current financial year after a stronger-than-anticipated travel business trading in North America, it said on Thursday.
The FTSE-250 listed-company said it signed deals for 18 tech accessory stores at Britain's biggest airports, including Heathrow and Stansted, which it expects will deliver about 60 million pounds ($82.65 million) in annual sales in a fully recovered travel environment.
The retailer said it would spend about 15 million pounds on the new stores in fiscal 2022, which would trade under the InMotion brand it uses in North America.
JP Morgan Cazenove analysts said the store wins create a significant new presence for WH Smith within the UK tech accessories travel market, which could result in further opportunities for the company to expand InMotion in the country and across Europe.
The brokerage also noted that all but one of the 18 stores were stores of Dixons Carphone Plc, which in April decided to shut its airport stores business, after a scheme allowing VAT-free shopping for overseas tourists was scrapped.
Impacted By The Slowdown
WH Smith said on Thursday that it continued to be impacted by the slowdown in its travel business, but was seeing an "encouraging recovery" in North America, where June sales recovered to about 88% of 2019 levels.
Overall, revenue at its travel business, which includes its airport and train station shops and kiosks, recovered to 48% of 2019 levels in the 18 weeks to 3 July, up from 34% in its second quarter.
The two-century-old company also said that high-street revenue recovered to 86% of 2019 levels in the 18 weeks to 3 July, but that footfall continued to be below pre-pandemic levels.
WH Smith, hit hard by the pandemic due to travel curbs and work-from-home mandates, warned in April of the possible risk of breaching its covenant tests in 2022 after posting a first-half loss.
It said on Thursday that its liquidity position was strong and that it would continue to focus on reducing cash burn, which amounted to about 2 million pounds per month over the March to June period.
WH Smith shares were up 0.8% at £16.62 in morning trading.