WH Smith drives profits improvement
Sales in core categories dip over Christmas
Tight cost controls at WH Smith have driven an improvement in profits despite a continuing fight for sales in the retailer’s core book and entertainment categories.
WH Smith’s retail like for like sales fell by 1 per cent in the six weeks to January 15 and by 2 per cent in the 20 weeks to the same date.
The company said its sales performance reflects a planned focus on margin improvement, in particular “not chasing unprofitable sales”, as well as the overall difficult trading environment.
Profitability for the year to date has improved substantially, with the high street retail business boosted by a “significant” increase in margins as well as tight cost controls, together with strong performances from the travel retail and news distribution arms.
The company said: “Gross margin improvement in excess of 200 basis points has been greater than anticipated and cost savings have been delivered faster than planned.”
Margin improvements in the high street were driven by a planned reduction in unprofitable promotions and “focus on profitable sales”. There has been an encouraging performance from new stationery initiatives. while buying terms and product availability have been improved.
Book sales for the 20 weeks were below the prevous year, which saw unprofitable promotions, but this was balanced by gains in margin. Stationery and news and & impulse ranges delivered like-for-like increases. “Entertainment, where we have reduced our exposure, continued to be difficult from a sales perspective, as key DVD titles underperformed market expectations, but gross margins held steady.”
[img r]WHSmithairportstore.jpg[/img]The travel retail business saw 4 per cent like-for-like sales growth for both the six and 20 weeks, while news distribution sales were up 2 per cent across the 20 week period.
Kate Swann, group chief executive said: “Progress against our plan to deliver value to shareholders is encouraging. Customer response to increased product choice, better availability and improved store standards has been positive. This is a long-term recovery programme and much remains to be done; however, we are on track and confident in the outcome for the year.”
