Book revenue drops 4% at W H Smith

W H Smith has reported a 2% rise in revenue and a 7% rise in pre-tax profits for the year to end August 2017, bolstered by “strong" revenue growth in its travel business which has overtaken the high street business in revenue terms for the first time. However its book business saw a like-for-like revenue drop of 4% on the previous year.

Group revenue was up 2% to £1.2bn. Group profit before tax was £140m, a rise of 7% on the previous year (£131m). Travel delivered a "strong revenue performance" across all channels with total revenue at £624m, up 9% on the previous year (4% like-for-like), reflecting investment in the company's key initiatives and improved passenger numbers, the company said. Profit from the travel business was £96m, up 10% from £87m in 2016. High Street's performance was described as "good", but total revenue stood at £610m, down 5% (4% on a like-for-like basis), compared to the previous year. Profit in the division was flat, remaining at £62m for the year.

For the first time, revenue in Travel has overtaken High Steet, and Travel is now the largest part of the company in both revenue and profit. Travel profit accounted for over 60% of Group trading profit, and total group sales were up 6% to £158m.

In its books business, like-for-like revenue was down 4% with gross margin "up" an unspecified percentage compared to the previous year. The company said the general retail market "remains fairly stable" with the quality of publishing "still the biggest driver of market performance". During the first half, spoof humour books were a key driver of revenue while revenue from "colour therapy" titles reduced significantly versus last year. In the second half, the company annualised good publishing from 2016 including Harry Potter and The Cursed Child (Little, Brown).

Group chief executive Stephen Clarke said the results reflected a “good performance" across the Group.

"Our investment in new product design continues to drive stationery revenue and we have been pleased with the success of the recently launched Tom Fletcher Kids Book Club", he said.

Following the “successful" opening of a standalone bookshop in Euston Station earlier this financial year, the company revealed plans to open a further two bookshops in the first half of the current financial year. “These dedicated bookshops provide an enhanced customer experience with a unique look and feel and have been well received by customers, publishers and landlords", said the company. It now has 11 bookshops open in airports and rail stations.

The company is currently celebrating its 225th anniversary and this year opened its 225th international store.

Looking ahead, the company intends to focus on profitable growth, cash generation and new opportunities to profitably invest in the future. "While the economic environment remains uncertain, we are well positioned for the current year and beyond", Clarke said.