The modest downward move in WH Smith's (SMWH) shares on results day might reflect concern about the state of the British high street. Footfall hasn't been great: like-for-like sales across the stationer’s high-street estate slipped 3 per cent during the opening half.
But this is just one of the faces of the modern WH Smith, a company increasingly looking to its travel division - airports, railway stations and other on-the-go units - to drive growth. There, like-for-like sales rose by a solid 5 per cent, which drove divisional trading profits up from £35m to £39m. The group is winning more business abroad too, signing 23 overseas travel contracts in airports from Europe to Singapore. Travel revenues as a proportion of the top line increased to 45 per cent during the first half, compared with 42 per cent in the comparable period last year, bringing a meaningful tipping point closer.
The other thing WH Smith is good at is cutting costs. A £7m cost saving on the high street side allowed gross margins to expand by 100 basis points here, while an improved sales mix in travel led to an 80 basis point improvement.
Analysts at Peel Hunt expect pre-tax profits of £139m for the year ending August 2017, giving EPS of 103p, compared with £132m and 94.8p in FY2016.
WH SMITH (SMWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,791p | MARKET VALUE: | £2bn | |
| TOUCH: | 1,790-1,792p | 12-MONTH HIGH: | 1,963p | LOW: 1,174p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 154p* | NET DEBT: | 12% | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 633 | 80 | 57.9 | 13.4 |
| 2017 | 643 | 83 | 62.2 | 14.6 |
| % change | +2 | +4 | +7 | +9 |
Ex-div: 13 Jul Payment: 3 Aug *Includes intangible assets of £64m, or 57p a share | ||||
