WH Smith posts £73m profit
Stationer WH Smith was the second high street institution to surprise the market this week with its turnaround progress.
Chief executive Kate Swann followed Marks & Spencer boss Stuart Rose’s example as pre-tax profits came in at £73m for the year to 31 August. Although like-for-like sales fell 2 per cent during the past six weeks — an estimated 4 per cent down at its high street outlets — the stock was one of the biggest risers of the day, up 22.75p to 364p.
Swann is ahead in her three-year cost-cutting plan and sees scope for savings of up to £50m ahead of the £30m previously identified.
“One year into our plan we are on track, despite the challenging trading environment,” she said.
The former Argos boss believes that WH Smith can scrimp harder, with savings via the introduction of in-store label printers for promotions.
At the eponymous retail chain, which includes high street and travel stores, like-for-like sales over the year fell 2 per cent to £1.4bn but profitability improved significantly as the shift towards higher margin stationery and cards paid off.
The trend will continue this Christmas, with WH Smith slashing the number of value Christmas card options by a third and introducing 2,000 more expensive lines.
Seymour Pierce analyst Richard Ratner echoed comments made on the M&S interim figure. “An encouraging set of results, although if we were being mealy-mouthed, we would point out that Kate Swann and her team have seized the low hanging fruit.”
Sales at its News Distribution arm were flat at £1.2bn, but profitability nudged ahead from £35m last year to £37m.
WH Smith disposed of publishing arm HodderHeadline for £229m last year.
