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Dixons and WH Smith: diverging fortunes in airport shopping

Which retailer is coping better with empty airports?
April 29, 2021
  • Removal of duty free shopping hurts airport shops
  • WH Smith lines up 100 new travel stores to open over next three years

If a year of travel restrictions was a thorn in the side of Dixons Carphone (DC), the removal of duty free shopping has been a hammer blow. Management has therefore decided to close its 35 travel stores, which contributed £20m of profit to the loss making business in its 2020 financial year. The company says it does not anticipate traveller numbers to recover sufficiently to cover the loss in demand from duty free shoppers. 

But not everyone has such a bleak outlook for the travel sector. In its interim results WH Smith (SMWH) announced that it has won many new tenders in the last few months, meaning it has a pipeline of over 100 new travel stores set to open over the next three years. The company unsurprisingly swung into an interim loss position but, having turned to shareholders for a cash injection twice in the last year, has a stable balance sheet which should see it emerge from the crisis. 

In the travel division, the big advantage Smiths has over Dixons is that a significant amount of new business is coming from North America, which seems to be opening up its travel sector far quicker than the UK, helped by the popularity of domestic travel. Hold at 1,827p. 

WH SMITH (SMWH)   
ORD PRICE:1,827pMARKET VALUE:£2.39bn
TOUCH:1,826 - 1,827p12-MONTH HIGH:2,064pLOW: 788p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:131p*NET DEBT:£837m
Half-year to 28 FebTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
202074763.041.6nil
2021420-38.0-26.7nil
% change-44---
Ex-div:na   
Payment:na   
*Includes intangible assets of £471m or 360p a share