Online and a successful peak see WHSmith survive, but tough 2021 awaits

WH Smith's high street business reported a trading profit this year. Image: Shutterstock

WH Smith's high street business reported a trading profit this year. Image: Shutterstock

WHSmith saw a better than expected Christmas peak, but is bracing itself for a large hit in early 2021 as lockdowns hit its stores and travel businesses more than online can compensate for.

The retailer, which operates on the High Street, in hospitals, at train stations and airports, saw revenue for the 20 weeks to January 16 hit just 59% of 2019 levels, with takings from travel outlets at a poor 37% of previous levels. 

High Street revenues were stronger, hitting 87% of year-on-year levels.

The retailer is also spending around £20m in cash a month keeping its stores ticking over, which while offset by good trading in the peak is likely to become a drain in the early part of this year, analysts warn.

The company has seen growth from its online services, seeing “record” performances from its online businesses funlypigeon.comcultpens.com and whsmith.co.uk.

This has helped it generate some £90m in liquidity, which along with the £300m in state support it has received, will be key to keeping the business going through the first half of 2021.

Commenting on the results, chief executive Carl Cowling says: “Covid-19 continues to have a significant impact on the WH Smith group, however we are pleased with our performance over the Christmas period which was better than anticipated. We remain well placed to navigate our way through this ongoing period of uncertainty and benefit from the recovery of our key markets in due course.”

The company reported strong performances from both its seasonal and new ’work from home’ ranges and exited Christmas with a clean stock position.

Cowling says: “Most of our stores traded through the period and continue to do so, in line with government guidance which classes newsagents as essential retailers. We have however closed our non-newsagent stores as well as secondary floors across some of our larger stores, while maintaining access for essential Post Office services,” it added.

In North America, the firm’s second biggest market, the recovery has been faster due to higher volumes of domestic travel, the retailer said.

Cowling adds that WHSmith had not seen any Brexit-related disruption and did not anticipate major challenges to imports.

Russell Pointon, Director of Consumer and Media at Edison Group comments:  “Investor’s will be glad to see that the company generated cash during the November/December period and ended the year with a stronger cash position than anticipated with liquidity of £90m. Going forward, investor´s will be keeping a close eye on possible travel restrictions and the impact that will have on the company. WH Smith has managed to produce a strong set of results on the back of housing Post Office and their online business. However, if travel restrictions keep in place into the second half of the year, that could potentially start to have a toll on the company’s finances.”

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