W H Smith raises full-year expectations after US Travel store bounce

W H Smith expects its full-year results to be slightly ahead of expectations following improved revenues in its US Travel stores, the retailer reported in a trading update.

The firm saw its group revenues in the eight weeks to 28th August 2021 rise to 71% of levels in the same period in 2019. For the second half of the year, sales were at 65% of 2019 levels, up from 60% in the first half.

In Travel, revenue hit 64% of 2019 levels in the eight weeks to 28th August, up on the second half's 55% and just 41% in the first, although the UK side continued to be challenged.

The company noted: “Our strategy to focus on customer conversion and increasing average transaction value continues to progress well.  As expected, in UK Travel, passenger numbers remain significantly down versus 2019 levels, however we have continued to see a gradual recovery in sales as restrictions have eased throughout July and August.”

In the UK, Travel was at 48% of 2019 levels in the eight weeks to 28th August, at 38% in the second quarter and 30% in the first quarter. Airport stores were the most impacted as travel restrictions hit, although the company said it will open another four of its InMotion airport technology stores on top of the 18 it has previously announced.

It noted: “Outside of the UK, our North America business has performed well in July and August, with sales at 93% compared to 2019 levels. We remain confident in the strength of our North American business and in winning further stores in this market.”

For the High Street, levels for the eight weeks to 28th August were at 84% of the same period in 2019, just under second-half revenues (85%) and 2% up on the first half.

“Our High Street business generates cash from its portfolio of well-located stores and growing internet businesses,” the company said.  “We continue to focus on the return on space and cost efficiency by building additional flexibility into our cost base.”

Looking ahead, W H Smith said it expected the outcome for the year to be “slightly ahead” of expectations outlined in its previous update back in July.

However, it added: “As previously stated, we remain confident in revenues returning to pre-Covid levels in the next two to three years. While there will be a return to good levels of profitability in the year ending August 2022, the trajectory of the recovery in travel remains uncertain. This, combined with the previously announced accounting finance charges relating to the successful convertible bond issue on 29th April 2021, means that we currently anticipate the levels of profitability for the year ending August 2022 will be at the lower end of market expectations.”

The company released the update ahead of reporting its preliminary results for the 12 months ending 31st August on 11th November.