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How Covid-19 has affected WHSmith’s business

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Online book sales at WHSmith were 400% up over the last month – but travel and high street revenues were both sharply down, the retailer said this week.

The update came as WHSmith’s half-year results showed how its business had significantly changed since the outbreak of the coronavirus pandemic.

The high street and travel retailer reported half-year group revenues of £747m in the six months to February 29, up by 7% compared to the same time last year. Like-for-like (LFL) sales, which strip out the effect of store openings and closures, were down by 1% and trading profits up by 11% at £49m. Revenues from its travel business were up by 19% – or 2% LFL – but its high street revenues were down by 5% in total, and 4% LFL. Pre-tax profits came in at £63m, down from £65m a year earlier. 

But since the outbreak of Covid-19, that profile has changed fast. Most of WHSmith’s airport and railway station shops are temporarily closed, but 203 high street shops with Post Offices continue to trade as do 130 shops within hospitals. In April alone, group revenue was 85% down on the same time last year – with sharp falls in both travel (-91%) and high street (-74%) sales. Online sales have grown strongly at the same time, with book sales (+400%) doing up particularly well. 

WHSmith group chief executive Carl 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 WH Smith have responded to these unprecedented times and I would like to thank them all. 

“Our primary focus over the past eight weeks has been to protect our colleagues across all areas of our business and our customers. We have supported many good causes and we have kept over 300 stores open to serve the communities that most need our services at this critical time, including the NHS and the communities that rely on the Post Office services we provide on the high street.  

“There was very little impact of Covid-19 on our first half results, however inevitably the performance in the second half will be very different.”pastedGraphic.png

Cowling said that Covid-19 had had a “significant impact” on the business, but that it had responded quickly. “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,” he said. 

Following an equity fundraising that made about £162m in April, the retailer has now put in place an extra £120m in lending, taking its available liquidity to about £400m.

Its plan for the second half of the year includes plans to phase the reopening of its stores, invest in new store formats in the UK and North America and to expand its relationship with M&S, taking its pilot with the retailer to two more high street stores. WHSmith has been a franchise partner of M&S since 2012 and currently operates 21 M&S Simply Food stores across the UK, and has 22 M&S store-within-a-store outlets in its WH Smith shops, predominantly in hospitals. 

Image courtesy of WH Smith

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