Overview
- On Wednesday WH Smith said it now expects headline pre-tax profit of £75 million for the year to 31 August, down sharply from last year’s c.£108 million.
- The group reported unaudited group revenue up about 5% and like-for-like sales up about 2%, but said lower trading margins from heavier promotions, reduced brand marketing and inflation are eroding profits.
- North America remains a material drag with like-for-like revenue down about 3% and the region still carrying the legacy issue of an admitted accounting overstatement of up to c.£50 million under FCA and independent review scrutiny.
- Management has taken balance-sheet and portfolio steps this year, raising roughly £103 million of equity in June, selling the UK high-street estate to Modella Capital, exiting or franchising sub-scale international markets and refocusing investment on travel essentials and airport store refurbishments.
- Investors reacted negatively with shares slipping to multi-year lows near 357p, leaving confidence fragile ahead of the group’s preliminary results due on 12 November when investors will get the next formal update.