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WH Smith plans high-street closures

The retailer is planning to close six high street stores, and wind down WH Smith Local and Cardmarket
October 11, 2018

WH Smith (SMWH) hasn't been immune to the pressures plaguing British high street retailers. As such, the stationer is reviewing its high street business to ensure it remains 'fit for purpose'. The move will see the wind down of what management feels are "non-core initiatives", such as Cardmarket and franchise business WH Smith Local, alongside the closure of six high street stores with onerous leases. So far this has cost £9m, with another £5m due to be spent on restructuring efforts during the current financial year. For the year to August, trading profit across 607 high street stores fell 3 per cent to £60m.

IC TIP: Hold at 1783p

Travel locations – unsurprisingly – fared better, benefiting from growth in passenger numbers and store investment. Sales increased by 8 per cent, with trading profit up 7 per cent to £103m. This was pronounced in WH Smith’s international travel locations, where expansion boosted sales by a fifth to £132m (up 4 per cent on a like-for-like constant-currency basis). Management claims the international business is "growing rapidly", with 42 new units won during the year and 58 sites opened, bringing the total to 286 international sites.

Bloomberg consensus estimates are for EPS of 117p during the year to August 2019, compared with 108p in FY2018.

WH SMITH (SMWH)   
ORD PRICE:1,783pMARKET VALUE:£ 1.95bn
TOUCH:1,782-1,785p12-MONTH HIGH:2,347pLOW: 1,772p
DIVIDEND YIELD:3.0%PE RATIO:18
NET ASSET VALUE:194p*NET DEBT:1%
Year to 31 AugTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20141.1611277.335.0
20151.1812187.139.4
20161.2113195.643.9
20171.2314010548.2
20181.2613499.154.1
% change+2-4-5+12
Ex-div:10 Jan   
Payment:31 Jan   
*Includes intangible assets of £72m, or 66p a share