W H Smith trading update shows group and travel revenue on the rise

W H Smith's group revenue rose on the previous two quarters in the 18-week period to 3rd July 2021, including steady improvement in Travel, as it announced 18 new technology and accessories stores in a trading update.

Total revenue for the group in the 18 weeks was 62% of 2019 levels, up from 59% and 58% in the first and second quarters respectively.

The High Street was at 86% of 2019 levels, up on the second quarter's 84% but down on the first quarter's 88%. Travel was at 48% of 2019 trade, a sharp rise on the first quarter's 39% and the second quarter's 34%.

The retailer said that while both its Travel and High Street businesses continue to be impacted by the current trading environment, they are “encouraged by the improving trends”. Travel is seeing “a gradual recovery in sales as restrictions are eased” with UK Travel total revenue at 32% of 2019 levels. In the week to 3rd July total UK Travel revenue was at 38% compared to the same period in 2019.

A statement said: “Our strategy to focus on customer conversion and increasing average transaction values continues to progress well. We continue to plan cautiously as we await further government guidance on air travel. In our hospital channel, we continue to see an improved performance as hospitals return to general medical care. Rail has continued to improve as leisure traffic has increased and more people have returned to office working. Going forward, we see further opportunities to win additional W H Smith stores in airports and hospitals and we are well positioned as travel markets recover and passenger numbers increase."

The North America business has "continued its encouraging recovery" with total revenue during the 18-week period at 74% of 2019 levels with more recent sales, in June, at 88% of 2019 levels. In Europe, where travel restrictions have been eased in recent weeks, the retailer said it was seeing a "gradual improvement as passenger numbers begin to recover". The new Travel store opening programme “remains on track”.

On the High Street, total revenue in the 18-week period is up to 86% versus 2019. The retailer said: “This performance reflects high street footfall which remains below pre-pandemic levels. However, our websites, including funkypigeon.com, continue to deliver a good performance.” During this period, the retailer has also been encouraging customers to donate money to support children’s literacy to reach the 380,000 children in the UK that do not own a book.

WHS said it had also successfully won 18 technology and accessories stores across a number of significant UK airports, including Heathrow, Stansted, Manchester, Luton, Birmingham and East Midlands. These stores will trade under the InMotion brand, its tech and accessories business in North America.

Overall the retailer’s liquidity position “remains strong” and is “consistent” with the interim results on 29th April. A spokesperson said: “We continue to focus on minimising cashflows and our cash burn over the March to June period was approximately £2m per month. As at the end of June 2021, we had cash of £95m and our revolving credit facility of £250m remains undrawn. Following the stronger than anticipated performance from our North America business, we anticipate a small improvement to management’s expectations for the current financial year.”