There was little change in the story at WH Smith (SMWH) last year, as cost-cutting offset a 3 per cent decline in like-for-like sales. Overall, adjusted pre-tax profits rose 8 per cent to £114m, excluding a pension interest charge of £2m. The group remains highly cash-generative and so announced a further share buy-back of £50m, alongside a 14 per cent increase in the full-year dividend.
Higher air passenger numbers boosted the travel business, where trading profit grew 11 per cent to £73m. Revenues were up 4 per cent on flat like-for-likes sales. Overseas, the retailer won 30 new international units, bringing the total to 165, of which 138 are now open.
Meanwhile, the declining high-street business benefited from lower costs. Profits rose 4 per cent to £58m despite a 5 per cent fall in underlying revenue. Chief executive Stephen Clarke announced another round of divisional cost savings, which will now reach £21m over the next three years - almost double the previous target. This financial year £11m will be slashed from overheads, with some of the biggest savings to come from investment in technology. That includes in-store tablets for managers and supervisors, complete with apps allowing them to carry out back-office work more efficiently on the shop floor.
As ever, the focus for this year will be on profitable growth, cash generation and investment in new growth opportunities. One such opportunity includes "cardmarket", a standalone greeting cards store at the value end of the market, which WHSmith is to trial this year. And the five franchised newsagents under the WHSmith Local brand have proved so successful that the concept is to be rolled out to a further 30 shops.
Kate Calvert, an analyst at Investec, expects pre-tax profit of £119.8m in the 2014-15 financial year, giving EPS of 85p.
| WHSMITH (SMWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,032p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 1,030-1,034p | 12-MONTH HIGH: | 1,246p | LOW: 880p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 85p* | NET CASH: | £22m | |
| Year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.31 | 89 | 47.6 | 19.4 |
| 2011 | 1.27 | 93 | 52.1 | 22.5 |
| 2012 | 1.24 | 102 | 61.5 | 26.9 |
| 2013 | 1.19 | 103 | 68.9 | 30.7 |
| 2014 | 1.16 | 112 | 79.0 | 35 |
| % change | -2 | +9 | +15 | +14 |
Ex-div: 8 Jan Payment: 29 Jan *Includes intangible assets of £56m, or 47p a share | ||||
