WH Smith profits rise despite fall in high street sales
WH Smith has reported a 6% rise in its annual profits, despite a fall in sales, after the book and stationery retailer increased its focus on maintaining tight cost control and improving margins.
In the year to 31 August 2013, pre-tax profits grew to £108 million from £102 million in the previous year although group sales dropped by 5% to £1.2 billion with like-for-like sales also falling by 5%.
At WH Smith’s 615 high street stores, trading profits rose by 4% to £56 million. Sales were down 7% in total and by 6% on a like-for-like basis which the retailer said was a reflection of “challenging markets” and the strong publishing schedule in the second half of the prior year. Gross margin improved by around 200bps through “rebalancing the mix of the business, better buying, improved sourcing and markdown management”.
The retailer’s travel division, which includes stores in airports and railways stations, saw trading profits grow by 5% to £66 million. However, sales were flat with like-for-like sales down by 4%. Gross margin increased by 180bps.
Never Miss a Retail Update!During the year, the retailer completed the £50 million return of cash to shareholders announced in August 2012 and today announced a further return of up to £50 million through a rolling share buyback programme.
It also confirmed that it had increased targeted cost savings in its high street business to £22 million over the next three years which would include the introduction of more self-service checkouts.
WH Smith chief executive Stephen Clarke said: “Looking to the year ahead, we continue to plan cautiously in an uncertain environment, however we are a resilient business and are well positioned for continued growth in both the UK and internationally.”
