WHS High Street sees strong Christmas but group revenues slump

W H Smith's total group revenue for the 20 weeks to 16th January 2021 slumped to 59% of 2019 levels in the same period but the chain has reported a “better than expected” Christmas period and strong High Street sales.

In December, High Street sales were 92% of 2019 levels despite reduced footfall, while Travel was at 36% and Group at 67%. For January, Group revenues are at 46% compared to the same time last year, the retailer said.

In a trading update which did not break out overall figures, the firm said High Street revenue was 87% of 2019 levels for the 20-week period to 16th January. The retailer, which last year revealed it planned £34m in saving overs three years including the closure of around 25 stores, reported “strong performances” from both its seasonal and work from home ranges.

More than 200 High Street stores traded through the period and continue to do so because, unlike dedicated bookshops, newsagents are classed as essential retailers. However, the company has shut non-newsagent stores and secondary floors in larger branches.

W H Smith's online businesses performed “very strongly” with “record performances and sales significantly ahead of the prior year”, the report said.

In Travel, total revenue was 37% compared to the same period in 2019. The firm said it was focusing on initiatives within its control including renegotiating rents, increasing conversion and category development.

For North America, where approximately 85% of passengers are domestic, the company said it continues to see a faster recovery compared to the rest of the world. Overall revenue for the 20-week period was at 43% of 2019 levels.

Addressing coronavirus, the report said: “We were able to apply the learnings from previous lockdowns and acted quickly to preserve liquidity including taking immediate action to return stock, furlough staff and manage our supply chain. We also took measures to ensure our stores that are temporarily closed are able to open quickly as lockdown eases. We are not anticipating any material change to the current situation in the UK prior to the end of March 2021.”

W H Smith also said it has not experienced any disruption as a result of Brexit and does not expect “a material impact on our ability to import stock in the year ahead”.

C.e.o. Carl Cowling said: “Covid-19 continues to have a significant impact on the W H Smith Group, however we are pleased with our performance over the Christmas period which was better than anticipated.

“Our key priority is the health and wellbeing of both our colleagues and our customers and continuing to provide a safe environment for them. In our High Street business, we worked hard to navigate our way through the evolving Covid restrictions as we approached the Christmas trading period. This positioned us well, resulting in a better than expected Christmas with sales in December at 92% of 2019 levels. Our online businesses continued to deliver significant year on year growth in the period.

“In our Travel business, we saw little change in the environment prior to the current lockdown, as expected, with sales in December at 36% of 2019 levels. We remain focused on average transaction values which continue to grow, cost control, and operational efficiencies and I am pleased with the progress we are making, particularly given the backdrop of significantly reduced passenger numbers. In North America, we have seen a quicker recovery versus the rest of the world, given the higher volume of domestic travel.

“We generated cash during November and December and ended December with a stronger cash position than anticipated with liquidity of £90m, which is materially ahead of our original plan.

“I am extremely grateful to all our colleagues around the world and, in particular, our store teams who have worked exceptionally hard throughout what has been a very challenging period. We remain well placed to navigate our way through this ongoing period of uncertainty and benefit from the recovery of our key markets in due course.”

The chain has also appointed Kal Atwal as a non-executive director with effect from 1st February 2021. Atwal spent 16 years at BGL Group and is currently a non-executive director at Royal London Asset Management, Admiral Financial Services, a subsidiary of Admiral Group Plc, and chair of Simply Cook, a tech-enabled meal kit subscription service.