WHSmith records 3% profit rise as like-for-likes slip

The bookseller and stationer reported a “robust” high street performance with operating profit flat at £47m for the six months to February 29.

Total group pre-tax profit rose to £66m from £64m in 2011.

Total sales in its travel division were up 2% but like-for-like sales fell 3%. Operating profit rose 8% to £27m.

WHSmith also revealed it open 100 shop within shops for its Kobo ereader, following “successful” trials in some of its larger stores.

Group chief executive Kate Swann said the retailer’s high street division had seen “gross margin improvement and costs tightly controlled”.

Swann said: “The group remains cash generative enabling us to invest in our businesses and new opportunities, whilst also returning cash to shareholders. We have returned £33m to shareholders through the share buyback announced in August 2011 and we have today increased the interim dividend by 15%.

“Looking ahead, we expect the trading environment to be challenging, however we are a resilient business with a consistent record of both profit growth and cash generation and we have opportunities for growth in the UK and internationally.”

WHSmith has net cash of £53m on its balance sheet.

Like-for-like stationery sales were down 2%, books were down 8and news and impulse categories saw a 3% like-for-like decline.

In International, a further 20 new stores were unveiled today, bringing the total to 80 now open or agreed. WH Smith has more than 500 travel stores in the UK.

Funky Pigeon standalone stores are also reported to be trading well, with a further five openings bringing the total to nine. A further 17 stores are planned to open in the second half of the year.

The company also revealed that Stephen Clarke, the managing director of WHSmith’s high street division, will join the board as an executive director from June 1.  

Investec analyst David Jeary said: “Unsurprisingly, the like-for-like and gross margin performance achieved over half one shows little variance from the figures reported for 21 weeks in the January trading update.

“Given a small stub trading period since the January trading update, product category performance was broadly in line with that outlined then. The biggest drag on the like-for-likes remains the ongoing withdrawal from entertainment, where like-for-likes sales were down 47%.

He added: “While passenger trend numbers remain below the long-term historic average, these should improve as economic conditions normalise. The travel division will remain the key growth driver.”