WHSmith sales decimated by coronavirus as first-half profits dip

The stationery specialist said revenue in April plummeted 85% year on year as sales made through its growing portfolio of airport and train station shops tumbled 91%. Revenue from the retailer’s high street locations was down 74% during the same month.

WHSmith said the “vast majority” of its travel stores are temporarily closed amid the pandemic, which has caused a “significant decline in passenger numbers”.

It continues to operate 130 stores inside UK hospitals, as well as 203 high street locations that include Post Offices.

The retailer is also continuing to trade online – its ecommerce sales have jumped 400% during the past month as consumers in lockdown snap up books to beat the boredom.

Chief executive Carl Cowling hailed the retailer as a “resilient and versatile business” and insisted it remained in “a strong position to navigate this time of uncertainty”.

WHSmith provided the coronavirus trading update alongside its half-year results, covering the six months to February 29 – before the virus took hold in the UK.

During the period, group pre-tax profit dipped 3% to £63m, although operating profit edged up 1% to £93m. On an IFRS16 basis, operating profit came in at £97m.

Trading profit from WHSmith’s travel division jumped 11% year on year to £49m, on sales of £432m – up 19%. On a like-for-like basis, stripping out the impact of the Marshall Retail Group acquisition, revenues across its travel division increased 2%.

Earnings from its high street portfolio fell 8% to £44m, as sales fell 5% to £315m. That marked a 4% drop in like-for-like terms.

WHSmith said it had scrapped its interim dividend payment as a result of the impact of coronavirus and said all “non-essential and non-contractual” capital expenditure had been delayed.

The retailer is also in discussions with its landlords in a bid to “significantly reduce or remove rent payments” and move to a turnover-based rent model.

It has already raised £162m following a share placing and secured an additional £120m of funding from its lenders.

Cowling said: “The emergence of Covid-19 and the associated global pandemic has affected all of us in ways that were unimaginable only a short while ago. I have enormous admiration for how our colleagues across WHSmith have responded to these unprecedented times and I would like to thank them all.

“Since March, we have seen a significant impact on our business as a result of Covid-19 with the majority of our stores closed around the world.

“We are a resilient and versatile business and with the operational actions we have taken including managing costs and the new financing arrangements, we are in a strong position to navigate this time of uncertainty and are well-positioned to benefit in due course from the normalisation and growth of our key markets.”