- Travel revenue up 9% for 13 weeks to 1 June
- On track to deliver on full year guidance
- Well positioned for peak summer trading
Global travel retailer WH Smith (SMWH) said it had seen continued positive trading momentum in the 13 weeks to 1 June, with total travel revenue up 9% putting it on track to deliver full-year results in line with expectations.
Investors welcomed the positive trading update and outlook, sending the shares close to the top of the mid-cap FTSE 250 index rising over 3% to £11.8. The shares are down around 10% for the year compared with a 6% gain for the mid-cap benchmark.
RESILIENT AGAINST TOUGH COMPARATIVES
The group performed well against tough comparisons from the same period in 2023 when total travel sales advanced by 31% and like-for-like sales were up 18% reflecting a strong bounce back in global travel from the pandemic.
The company continued to see a strong performance in the UK travel division with total revenue up 9% year on year. Revenue from airports was up 8%, hospitals saw a 14% advance and rail was up 8%.
WH Smith said the transformation into a ‘one-stop-shop’ for travel essentials had resulted in an increase in average transaction values and returns.
Revenue in the North American division increased 5%, which represents no growth on a like-for-like basis, continuing the trend reported at the half year.
The company is trialing several initiatives which have produced encouraging early signs and it won an ‘important’ new contract at Detroit airport comprising four new stores, while the tender pipeline remains strong.
The rest of the world division performed well with total sales up 16% year on year as passenger numbers continue to improve. The UK high street stores including online sales reported a 4% drop in revenue representing flat like-for-like revenue.
Looking ahead, the company said it was ‘well positioned as we enter the peak summer trading period’, adding ‘Good trading momentum continues across all three Travel divisions, and we are in a strong position to capitalise on substantial growth opportunities across our markets.’
EXPERT VIEW
AJ Bell investment director Russ Mould commented: ‘What’s really interesting is how WH Smith is helping to revive the Toys R Us brand. It is slowly converting parts of its UK stores to house sections dedicated to toys under this retro name and it looks like the strategy is paying off.
‘Everyone loves a bit of nostalgia and affection towards the name could help lure people in, hoping to relive the olden days. This could also foster a new generation of shoppers who gravitate towards the brand for their toys’.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (Ian Conway) own shares in AJ Bell.
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