WH Smith upbeat despite sales fall
10:11 23 January 2013
WH Smith hailed its resilience today as departing chief executive Kate Swann continued the retail chain's focus on profitability over sales.
Like-for-like revenues fell 5pc in the 20 weeks to January 20 but with close management of margins and costs the company said it still delivered a "good" profits performance for the period.
It is a formula that has worked well for the company, which operates around 618 stores on the high street and another 619 at travel sites such as airports, train stations and motorway service areas.
Shares rose more than a third last year and opened 1pc higher today as analysts backed the company's strategy.
In October, WH Smith's profits lifted 10pc to £102 million, compared with the £135 million loss it made in 2004 prior to Ms Swann's appointment. The figure is expected to rise to £106 million in this financial year.
Ms Swann has shifted the company's focus away from lower-margin CDs and DVDs towards books and stationery, as well as reduced its dependence on the Christmas season and the need for heavy discounting.
However Ms Swann disappointed investors in October by announcing plans to leave the group. She will hand over the reins to Steve Clarke, who is managing director of the high street division, having joined the group in 2004.
Ms Swann said she expected trading conditions to remain challenging but that the company's resilience and profits record meant she was confident of further growth.
Seymour Pierce analyst Kate Calvert said: "We believe there is still plenty of growth to go for, particularly in travel and internationally, and the high street business market position is probably strengthening given recent administrations as there become fewer places to shop on the high street."