WH Smith's 2022 profit is likely to be at the lower end of market expectations, the British retailer warned on Wednesday as a slow and uncertain recovery in global tourism squeezes its stores in travel hubs like airports and train stations.
The company's 2022 pretax profit was expected to be in the range of £70 million to £135 million ($96-186 million), according to a company-compiled consensus of analysts estimates.
WH Smith highlighted, though, that a quicker recovery in its North American travel stores in the last two months meant that the group's 2021 performance would be slightly better than market expectations of a pretax loss of £68 million.
Shares in the company, which sells books, travel and tech accessories and also has stores on high streets, were down nearly 7% in morning trade, underperforming London's broader midcaps index.
The global travel and tourism sector does not expect to fully recover from the COVID-19 crisis until at least 2023 as a result of uncertainty related to new virus variants and quarantine measures.
WH Smith's revenue globally from its travel-related stores, its biggest source of income, was still only at 55% of 2019 levels in the six months ending 31 August.
JP Morgan Cazenove analysts downgraded the group's 2022 and 2023 estimates for pretax profit due to the slower-than-expected recovery in global travel, and said didn't expect its underlying profitability to return to pre-pandemic levels until 2024.
WH Smith said that finance charges related to its bond issue in April would also affect its profitability in 2022.