WH Smith says its online businesses have grown strongly during its latest financial year – and particularly in the second half, in which the Covid-19 pandemic emerged.
Its WH Smith website, replaced during the year, saw sales grow by 240% in the second half of the year, while the retailer also reports strong sales at funkypigeon.com and cultpens.com. The retailer says it has also built its online proposition by extending ranges, increasing distribution capacity and building its customer engagement through social media.
But WHSMith says it expects to close about 25 shops in the current financial year, as leases expire.
The update came as the retailer reported revenue of £1.02bn, for the year to August 31
– down from £1.4bn a year earlier. At the bottom line it reported a pre-tax loss of £280m after one-off costs of £212m, mostly related to writing down the value of assets including shops, and restructuring costs. A year earlier the retailer reported pre-tax profits of £135m.
WHSmith’s figures today show how the Covid-19 pandemic has affected its business. The retailer’s high street stores have been able to trade – to an extent – through both lockdowns as an essential retailer to an extent. In the first lockdown it kept 203 high street branches that host Post Offices open, along with 130 shops within hospitals. In the current lockdown 558 high street shops are open and 243 travel shops. In April 2020, its shops took 17% of the revenue they did in April 2019, with high street stores taking 29% and travel stores – which include the hospital shops – taking 8%. By October 2020 that had recovered to 92% for high streets and 39% for travel shops – adding up to 59% of 2019 revenue.
WHSmith, ranked Top150 in RXUK Top500 research, today said it expects to close as many as 25 shops in the current financial year, as leases expire, though this is dependent “on the negotiations with our landlords and the government’s future approach to property rates”. The retailer is working with landlords to reduce or remove rent payments and to move towards a turnover-based rent. As of August 31, the retailer operated 568 WH Smith high street shops, following eight closures during the year, and 1,174 travel business shops – of which 650 were open as of August 31.
WHSmith says that following the second lockdown it does not expect a recovery to start until the second half of the year.
Its travel business has been badly affected both in the UK and Northern America, although this division includes the more resilient shops within hospitals. Nonetheless, the retailer says it expects to emerge stronger and with better operations as its markets recover. It added: “We will continue to invest in new stores and new formats in the UK and North America where we see attractive opportunities for profitable growth.”
WHSmith group chief executive Carl Cowling said the group had traded strongly until the outbreak of Covid-19 but that it had been “heavily impacted” by the pandemic. “Despite the many challenges faced, we responded quickly and took decisive actions to protect our colleagues, customers and the business including strengthening our financial position.
“While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85% of passengers are domestic, is beginning to see some encouraging signs of recovery. In addition, we continue to open new stores in the US and win significant tenders across major US airports.
“In high street, we had seen a steady recovery and we were well set up both in stores and online as we went into the second lockdown. We currently have 558 stores open.”