WH Smith’s ‘transformation’ to a ‘one-stop-shop for travel essentials’ reaps rewards
WH Smith said it is “well positioned” for the peak summer trading period as demand for travel helped offset continued decline in its high street arm.
Total travel revenue rose eight per cent year-on-year in the quarter leading up to 1 June, even as its high street arm noted a four per cent fall in takings. Group revenue rose 5 per cent.
WH Smith, which trades from 1,100 stores across the UK, said its Travel UK division comprising of air, rail and hospitals continued to perform strongly “as we annualise the strong recovery in passenger numbers in 2023.”
“The transformation of the business to a one-stop-shop for travel essentials is delivering strong results, increasing average transaction values and returns,” it added, noting the launch of its new food-to-go brand, Smiths Family Kitchen, in around 300 travel stores.
Revenue in the high street retailer’s rest of the world division also rose over the period, around 16 per cent on last year on a constant currency basis as “passenger numbers continue to improve across these markets.”
Looking ahead, the firm said it was “well positioned” ahead of the peak summer trading period.
It said: “Good trading momentum continues across all three Travel divisions and we are in a strong position to capitalise on substantial growth opportunities across our markets.”
WH Smith has increasingly sought to rely on its travel arm as demand booms following years of Covid-era lockdowns.
Air travel, in particular, has bounced back extraordinarily over the last 12 months, while UK rail numbers are closing in on pre-pandemic levels despite a chequered recovery in commuter numbers.
Investors though have responded tepidly to results over the last six months. Shares have fallen over 10 per cent in the year to date and an update in April showing a £2m dip in profit sent shares down five per cent the same morning.
Emma Carr, retail partner at the law firm, Gowling WLG, said: “Ongoing losses WHSmith’s high street outlets continue to suffer demonstrates that a turnaround of that format is urgently needed.
Perhaps that turnaround will result in more strategic partnerships, such as its recent in-store concessions deal with Toys-R-Us where the business will have a presence in 17 WH Smith high street outlets across the country, showcasing WH Smiths’ innovation in taking a more consolidated approach to customer demand.
She added: “It will therefore be important that WH Smith sufficiently commits to realigning its high street focus to better fit contemporary consumer demand, rather than relying on previous tried and tested approaches that no longer fit what customers looking to engage with the brand expect in comparison to the more convenience-led travel hub format that appear to be serving the retailer better at present. “