WH Smith (LSE:SMWH) reported a 5% year-on-year increase in group revenue during the peak summer trading period and maintained its expectation for full-year headline profit before tax of approximately £75 million, in line with market forecasts.
The travel retailer said revenue growth was supported by its UK operations, particularly stores in hospitals and travel hubs, alongside performance in its North American airport business.
Trading at North American resort locations was less favourable, while profitability across the group was affected by increased promotional activity, reduced brand marketing and inflationary pressures.
WH Smith is continuing a transformation programme focused on reducing costs, improving cash and working capital management, and reshaping its store portfolio towards travel retail formats that management expects to generate higher returns.
The company raised £103 million through an equity issue to support its balance sheet. Net debt has subsequently declined to approximately £325 million, with leverage standing at around 2.0 times.
As part of its portfolio review, WH Smith is withdrawing from or transitioning to franchise arrangements in several international markets, including Norway, Denmark, Sweden and the Netherlands.
The group is also reviewing its North American resort operations, with plans to reduce its exposure to stores with a greater emphasis on fashion products.
In the UK, WH Smith opened six new one-stop-shop stores at major airports ahead of the peak summer trading period.
The format combines a broader range of travel essentials within individual stores, with the company seeking to increase average transaction values in locations with high passenger volumes.
WH Smith has also completed the disposal of Cult Pens as part of its programme to exit operations outside its core travel retail strategy.
Management is implementing further cost-saving measures and reviewing capital expenditure to align investment with its revised store portfolio.
The company continues to target improvements in cash generation and working capital as it adjusts its operations across domestic and international markets.
Despite the impact of promotional activity and inflation on margins, WH Smith reiterated its full-year headline profit before tax guidance of approximately £75 million.
The group operates travel retail stores across airports, railway stations, hospitals and resort locations, with a substantial presence in the UK and North America.
Its current strategy focuses on travel essentials, portfolio restructuring and franchise arrangements in selected international markets.
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