London (Parliament Politics Magazine) – WH Smith is to provide investors with a £50m windfall as holidaymakers snapping up travel essentials allowed a boost in summer sales at the retail chain.
The retailer stated it would launch a £50m share buyback an action that could boost its share price in a reflection of the powerful cashflow in the business, a healthy balance sheet and after obtaining £85m from the buyout of its pension fund. Its claims jumped more than 12% on the announcement.
Comparable group sales excluding new stores increased 5% in the year to the end of August, with global travel store sales up 7% from a year earlier. Its UK travel business noticed Comparable annual store sales in its UK travel business increased by 10%, while revenues from high street shops shrank by 2%. Total annual group revenues rose by 7%.
The 230-year-old chain, which has 1,100 stores across the UK, sells books and magazines as well as food and drinks. It has been closing high street stores while going into travel hubs such as railway stations, motorway services and airports.
How Has WH Smith’s Focus on Travel Essentials Enhanced Its Financial Performance?
The company, which has a presence in more than 30 countries, said that strong passenger numbers and its strategy of providing a one-stop shop for travel essentials – including everything from luggage waves to walking guides – had boosted sales. It stated it had also benefited from broadening its contents in food and drinks, health and beauty, and technology. Earlier this year, the company established its first own-label food-to-go range including sandwiches and burrito boxes – Smith’s Family Kitchen – which it stated was performing ahead of expectations. There was a 10% increase in total revenues in the company’s global travel business.
The overall increase in sales marks a change in wealth for the retailer, which lost two-thirds of its stock market value during the coronavirus pandemic and had to cut 1,500 employees. Its cash position was further supported by the completion of the company’s buyout of its limited pension benefit scheme.
WH Smith Pension Trust approved a £1bn full scheme buy-in with Standard Life in 2022, insuring the liabilities of just under 12,950 members. The culmination of the process has resulted in the company acquiring a £75m cash refund, as well as the transfer of a £10m investment fund, which will transform into cash over the next two years.
The company, which is worth £1.8bn, stated it hopes to return more surplus cash to investors in future. Carl Cowling, the chief executive, stated: “We have ended the financial year in a strong position, delivering a performance in line with our expectations with good growth across our travel businesses. Our UK division performed particularly well over the peak summer trading period.”