WH Smith has warned that up to 1,500 jobs could go in its business as it reviews both its travel and high street store operations.
The retailer, ranked Top150 in RXUK Top500 research, says in a trading update today that group sales in April were 83% lower than the same time last year, and continued at similar levels in May (-82%) before showing some signs of improving in June (-69%) and July (-57%). Sales remain far short of last year’s levels.
During Covid-19 lockdowns, WH Smith’s high street business fell sharply at first, with sales down in April (-71%) and May (-65%) before recovering somewhat in June (-41%) and July (-25%). Some 203 shops that include Post Offices stayed opened throughout the lockdown, and since June it has reopened its remaining high street shops with 575 now open. High street footfall, however, remains “significantly down on 2019 levels”, although its online businesses have performed “strongly”.
Travel was the hardest hit part of WH Smith’s business as use of public transport fell sharply during and following lockdowns. Sales in this part of its business, located at airports, train and bus stations, were down by 92% in April and by 91% in May, compared to the same time last year, and have showed less signs of recovery in June (-84%) and July (-73%). Today 53% of WH Smith’s travel shops are open and it is focused on improving the average transaction value at these sites. It expects to see a faster recovery in the US, where 85% of passengers are domestic.
The retailer is now reviewing both its travel and high store operations and is starting a collective consultation on a restructure that could mean up to 1,500 jobs become redundant. The cost of the restructure is expected to come to between £15m and £19m. In the current full-year WH Smith expects to report a headline pre-tax loss of between £70m and £75m.
WH Smith group chief executive Carl Cowling said: “Covid-109 continues to have a significant impact on the WH Smith Group. Throughout the pandemic, we have responded quickly and taken decisive actions to protect the business including substantially strengthening our financial position. We have also welcomed support from Government where available.
“In our Travel business, while we are beginning to see early signs of recovery in some of our markets, the speed of recovery continues to be slow. At the same time, while there has been some progress in our High Street business, it does continue to be adversely affected by low levels of footfall. As a result, we now need to take further action to reduce costs across our businesses. I regret that this will have an impact on a significant number of colleagues whose roles will be affected by these necessary actions, and we will do everything we can to support them at this challenging time.”
WH Smith says it still has £63m of cash and access to £220m in lending which remains as yet undrawn.
Cowling added: “While we are mindful of the continuing uncertainties that exist, we are a resilient and versatile business. The operational actions we are taking along with the financing arrangements that are in place, put us in a strong position to navigate this time of uncertainty and we are well positioned to benefit in due course from the recovery of our key markets.”
Commenting, George Charles, spokesperson for MoneySavingHeroes.co.uk, said: "Another day, another story of a high street retailer making cuts, this time WH Smith take centre stage as they announce they are considering cutting 1,500 jobs. After the news from PC World and Pizza Express yesterday, it seems like the ‘high’ street is going through its lowest point in recent history and it’s almost certain more devastating news is just round the corner.
“More must be done; the furlough scheme did nothing but delay the inevitable and now we are seeing major high street players making cuts left right and centre, affecting thousands of employees, in order to keep their head above the water. With the job market scarce, this is a truly terrifying time for those who have suddenly lost their income, with unemployment figures set to continue to rise throughout this incredibly challenging and unpredictable year.”