High-street staple WH Smith (SMWH) will continue to focus on growing its travel division after another set of full-year results revealed much stronger trading at the group's outlets in airports, railway stations and hospitals than on the high street. Like-for-like sales in the travel segment rose 4 per cent last year, helping push the division's trading profit up 10 per cent to £80m. That compares with a 3 per cent decline in like-for-like sales on the high street, which - combined with tight cost control - delivered a 2 per cent improvement in trading profit to £59m.
The high street business will soon be dealt another blow, too: the introduction of George Osborne's new living wage will cost the group an additional £1m this year - two-thirds of it on the high street - rising to between £2m and £3m a year thereafter. The group hopes to offset this through further cost-cutting - a discipline in which it has a formidable track record. Last year management took surplus costs amounting to £11m out of the high street division, and has identified another £11m for this year as part of a £20m three-year savings plan.
Analysts at Peel Hunt expect pre-tax profit of £129m in the current financial year, giving EPS of 95.6p, compared with pre-tax profit of £123m and 87.3p for the year ended August 2015.
WH SMITH (SMWH) | ||||
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ORD PRICE: | 1,630p | MARKET VALUE: | £1.88bn | |
TOUCH: | 1,629-1,631p | 12-MONTH HIGH: | 1,665p | LOW: 977p |
DIVIDEND YIELD: | 2.4% | PE RATIO: | 19 | |
NET ASSET VALUE: | 128p* | NET CASH: | £15m |
Year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
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 | 77.3 | 35.0 |
2015 | 1.18 | 121 | 87.1 | 39.4 |
% change | +1 | +8 | +13 | +13 |
Ex-div: 14 Jan Payment: 4 Feb *Includes intangible assets of £59m, or 51p a share |