WHSmith like-for-likes drop 5% but it delivers 'good profit'

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WHSmith like-for-like sales dropped 5% for the 20 weeks to January 20, but the book and stationery retailer said it delivered a “good profit performance” during the period.

Although the retailer posted a 4% fall in total sales, it said margins were “well managed” and costs tightly controlled throughout the business.

Like-for-like sales in the travel division declined 4% in the 20-week period, while total sales were flat. But WHSmith said it improved gross margin.

WHSmith said it is continuing to grow this division and it will open more travel stores in the UK and internationally.

The retailer’s high street division posted both like-for-likes and total sales down 5%. It said gross margin “improved strongly” in line with expectations and costs were tightly managed due to the current trading conditions.

Like-for-likes across books slumped 6% but gross margin grew 25 basis points, stationery like-for-likes dropped 2% but gross margin surged between 180 to 190 basis points, while news like-for-likes fell 4% as gross margins improved 180 basis points.

Broker Espirito Santo said cost savings on the high street are expected to be £4m higher than previously expected, generating £2m in the first half and £2m in the second half.

WHSmith outgoing chief executive Kate Swann said: “During the period we saw a good profit performance across the group. Margin was well managed and costs were tightly controlled throughout the business.

“Looking ahead, we expect the trading environment to remain challenging, however we are a resilient business with a consistent record of both profit growth and cash generation and are confident in making further progress in the year.”

Swann is set to leave the retailer in June after nine years at the helm. She will be replaced by managing director of the high street business, Steve Clarke.

In the statement to the City, WHSmith said it “remains highly cash generative with a strong balance sheet”.

In addition to the announcement in August that it will return up to £50m of cash to shareholders via a share buyback programme, yesterday the retailer purchased 2.48 million shares at an average price of £6.38.