WH Smith will pay a dividend for the first time in three years as it expects a strong Christmas after a return to foreign holidays helped the books-to-stationery retailer return to the black.
The company reported a £63m profit in the year to August, after a loss of £116m a year earlier, as sales rose 58% to £1.4bn.
Sales in travel and hospital outlets jumped 131%, including a 167% rise in the UK, as airport footfall bounced back, with only railway station branches still lagging at pre-pandemic levels.
The group also opened 98 shops in airports and train stations around the world. The strong travel performance offset a fall of nearly 2.5% in sales at high street stores, where the business closed 17 outlets.
Carl Cowling, chief executive of WH Smith, said the company would pay a dividend in January for the first time since 2020 as he expected to see a further uplift in sales over Christmas as more people travel.
He said WH Smith was also well prepared for a return to high street shopping in the UK, having bought in stock a couple of months earlier than usual to avoid a repeat of last year’s supply chain hiccups. “The last thing we wanted was Christmas cards turning up in January,” he said.
Sales for the group are 48% up on pre-pandemic levels, although the high street division is still 13% down on 2019, in the 10 weeks to 5 November, partly because of a £19m dive in sales at the group’s Funky Pigeon website, which was hit by a cyber-attack in April.
The group said that it was in negotiations with landlords of 150 of its 527 stores, and that a further 300 of the leases would be up for renewal in the next three years.
Cowling said WH Smith was unikely to see a major impact from the cost of living squeeze as the average transaction with a shopper was less than £10 and sales at its travel stores were about convenience.
The books market is expected to remain buoyant, after a return to reading during the pandemic, with Cowling tipping Richard Osman’s latest cosy crime novel as a likely bestseller.
“A lot of people have come back to reading and with initiatives like the work done by Marcus Rashford [the footballer who has launched a book club for children] there is a lot of evidence that younger people are starting to come back to books.”
Cowling said WH Smith was not being hit by cost inflation as badly as some other retailers, partly because it had fixed prices on many of its goods bought in east Asia a year ago and since it had also hedged against the recent fall in the value of the pound against the dollar.
He said the biggest impact on the business had been rising pay for staff – with shop workers’ hourly pay up 10% in the past year – but that had helped the group ensure it had enough workers for the Christmas rush.
