ii view: WH Smith continues overseas adventure

Full-year results to 31 August

• Revenue up 7% to £1.92 billion
• Pre-tax profit up 16% to £166 million
• Final dividend of 22.6p per share
• Total dividend for the year up 16% to 33.6p per share
• Net debt up 12% to £371 million

Chief executive Carl Cowling said:

"The Group has delivered an excellent performance throughout the year, particularly over the key summer trading period.

"The new financial year has started well. While there is some economic uncertainty, we are confident that 2025 will be another year of good progress for the Group."

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ii round-up:

WH Smith (LSE:SMWH) is a retailer selling a variety of items including newspapers, books, stationery, technology accessories and food on the go.  

It operates across two divisions. Travel related stores in the UK and overseas total 1291 outlets and are located at airports, railway stations and motorway service stations. 

UK High Street stores total 500 and regularly include sub stores such as Post Offices or Toys R Us outlets. 

Other group brands include its InMotion branded technology related stores, often sat next to its travel related stores at airports both in the UK and internationally, and online stores WHSmith.co.uk and Funkypigeon.com. 

For a round-up of these latest results announced on 14 November, please click here. 

ii view:

Started by Henry Walton Smith in 1792, the Swindon headquartered retailer today employs around 14,000 people. Travel related stores operate across the three areas of the UK, North America and Rest of the World which includes 146 in Europe, 92 in the Middle East and India, and 118 in Asia Pacific. UK travel stores generated its biggest slice of profit over this latest financial year at 55%, followed by North America at 24%, UK High Street at 15% and Rest of the World travel at 6%. The sale of on-the-go-food such as sandwiches and phone cables leave the likes of Greggs (LSE:GRG), Marks & Spencer Group (LSE:MKS) and Currys (LSE:CURY) as rivals. 

For investors, technology and its impact on group product categories such as newspapers, books and stationery cannot be overlooked. Trading profit for the UK High Street business fell 9% during this latest year. A forecast dividend yield of 3% compares to yields of 4% and more at Dunelm Group (LSE:DNLM), Kingfisher (LSE:KGF) and Sainsbury (J) (LSE:SBRY), while currency headwinds warrant consideration given growing overseas operations.

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More favourably, a focus in favour of travel related stores persists, with a net 38 opened this latest year and 14 UK high street stores closed. Geographical diversity includes exposure to North America, India and Asia Pacific unlike most of its UK listed rivals. Supply chain and store lease efficiencies underpinned cost savings of £16 million this latest fiscal year with savings of £26 million targeted over three years, while shareholder returns also include a £50 million share buyback programme announced in September. 

Performance of the UK high street business is always a worry, and the share price has struggled over the past few months. However, exposure to travel and a consensus analyst fair value estimate at over £15.25 per share do at least give reason to keep the retailer on watch lists.

Positives: 

• Product and geographical diversity
• Growing travel store numbers

Negatives:

• Uncertain economic outlook
• Overseas ops bring currency volatility 

The average rating of stock market analysts:

Buy