Member Article

WH Smith are a festive flop

British high street retailer WH Smith reported disappointing results for the 20 week Christmas period, with total sales falls of 5% year-on-year.

The store, which sells books, stationery, magazines and gifts, suffered a 4% slump in sales for its travel division, while retail sales also dropped by 5%.

In a statement, WH Smith remained positive and said it still has a “strong balance sheet”, and announced plans to return £50m to shareholders through a share buyback scheme.

The group said this came into effect on Monday 22nd January, and said the firm has purchased 2.68m shares at an average cost of £6.38.

Kate Swann, group chief executive, said: “During the period we saw a good profit performance across the Group. Margin was well managed and costs were tightly controlled throughout the business.

“Looking ahead, we expect the trading environment to remain challenging however we are a resilient business with a consistent record of both profit growth and cash generation, and are confident in making further progress in the year.”

Peter Saville partner at advisory firm Zolfo Cooper, commented: “WHSmith’s results are disappointing rather than disastrous. In these market conditions, a 5% sales decline combined with gross margin improvement isn’t a crisis – especially for WHSmith, which is heavily exposed to the turbulence of the current retail market.

“Indeed, Kate Swann’s pre-Christmas cost-cutting diet has enabled WHSmith to enter 2013 in relatively good shape.

“The strategic decision to steer clear of the quagmire of the entertainment market which has sucked HMV under looks increasingly wise.

“With Steve Clarke due to take over from Swann this June, WH Smith now needs to drive multichannel retailing and to stay on top of market and customer trends.”

This was posted in Bdaily's Members' News section by Miranda Dobson .