WHSmith said it expects the outcome for the year to August 31 to be ahead of expectation after an uptick in high street and travel trading, yet warned ongoing uncertainty could impact profits in future.
In a pre-close trading update for the year ending August 31, WHSmith said that while its travel and high street businesses continue to be affected by the coronavirus pandemic, sales as a percentage of pre-pandemic levels had recovered during the period.
However, the retailer also said “the trajectory of the recovery in travel remains uncertain”. Which, “combined with the previously announced accounting finance charges relating to the successful convertible bond issue on April 29, 2021, means that we currently anticipate the levels of profitability for the year ending August 2022 will be at the lower end of market expectations”.
In the first half of the period, travel retail sales were just 41% of 2019 levels. However, in the second half of the year that grew to 55% of pre-pandemic levels.
High street sales by comparison were 82% of 2019 levels in the first half and 85% in the second half of the year.
WHSmith also gave trading updates for the eight weeks to August 28, with the retailer’s travelling arm reporting 64% of pre-pandemic sales.
Total group sales for the period stood at 60% of pre-pandemic levels in the first half of the period, 65% in the second half and 71% in the eight weeks to August 28.
The retailer has also broken down its travel sales numbers, highlighting the ongoing struggles the aviation industry is having with the pandemic.
WHSmith managed just 16% of pre-pandemic sales in the first half and 17% in the second in airports during the period. This figure has recovered to just 30% by August 28.
Other travel locations have performed much stronger. Sales at train stations reached 59% of pre-pandemic levels in the eight weeks to August 28, while hospitals were back to 85% of 2019 revenues.
Travel retail sales as a whole are still less than half of what they were pre-pandemic, having reached just 48% of 2019 revenues by the end of August.
Despite enduring a torrid time with the pandemic, WHSmith said it “expects the outcome for the year to 31 August to be slightly ahead of expectations”.
The retailer also said it “remain[s] confident in revenues returning to pre-Covid levels in the next two to three years”.
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