Some readers of this article will have picked up a copy of the magazine at WH Smith (SMWH). If so, it's increasingly likely they bought it at an airport or train station. WH Smith splits its revenue into 'travel' and 'high street', and it's little surprise to see the former category outperform the latter. For the year ended 31 August, travel revenue grew 10 per cent, or 4 per cent on a like-for-like basis, while high street sales fell 3 per cent, or 2 per cent on an underlying basis. Overall, this left comparable sales 1 per cent higher at the group level.
It's not all doom and gloom on the high street, though. The company was up against a tough comparative figure given last year's adult colouring book craze, while gross margins actually grew 130 basis points due to a better sales mix, buying policy and stricter approach to mark-downs. Margins rose on the travel side, too, albeit only by a modest 30 basis points.
According to analysts at Liberum, the group has also been focusing on higher-margin stationery sales. Stationery continues to be the WH Smith's strongest category, with like-for-like sales there up 3 per cent while the decline in book sales has stabilised at a 2 per cent fall. The group also said its food-on-the-go ranges are increasingly popular with customers.
As ever, WH Smith is keen to take even more costs out of its business to keep profit moving in the right direction. Over the last year, the group managed to drill down its cost base by a further £11m, with £6m of that delivered in the second half, £2m ahead of budget. Another £10m-worth of savings have also been identified, which takes the total target to £19m over the next three years.
Analysts at Liberum expect adjusted pre-tax profit of £132m for the year ending August 2017, giving EPS of 98p, compared with £132m and 94.8p in FY2016.
| WH SMITH (SMWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,583p | MARKET VALUE: | £1.79bn | |
| TOUCH: | 1,582-1,584p | 12-MONTH HIGH: | 1,893p | LOW: 1,174p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 149p* | NET CASH: | £7m | |
| Year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2016 | 1.21 | 131 | 95.6 | 43.9 |
| % change | +3 | +8 | +10 | +11 |
Ex-div: 12 Jan Payment: 2 Feb *Includes intangible assets of £63m, or 56p a share | ||||
