WH Smiths has posted its interim results covering the six months to 29 February 2020.
While the company reported good first half performance, the significant mitigating actions implemented following the Covid-19 outbreak caused huge drops in YoY revenues. Though the group says that it is well positioned for the recovery.
WH Smith also provided an update on trading amid the Covid-19 pandemic alongside its half-year results.
For the six-month period ending February 29, prior to lockdown measures being imposed, WH Smith reported that revenues increased by seven per cent, with its revenue for its travel business rising by 19 per cent.
Speaking of the results, Carl Cowling, group chief executive, said: “There was very little impact of Covid-19 on our first half results, however inevitably the performance in the second half will be very different. During the first half, we continued to see strong sales growth in our Travel business with total revenue up 19 per cent, driven by our ongoing investment and initiatives in our UK business and our growing international businesses. Trading profit in the first half was up 11 per cent. Our recently acquired US business, MRG, continued to perform well and maintained its momentum of securing significant tender wins across major US airports. Our high street business also performed well delivering Trading profit of £44m in the period.
However, the retailer reported significant coronavirus-related declines in revenues since lockdown measures were imposed. WH Smiths said that Covid-19 has had a significant impact on current trading.
In April, WH Smiths total revenue was down 85 per cent on the same period last year, as expected, with travel revenue down 91 per cent and high street revenue down 74 per cent.
Cowling said: “The emergence of Covid-19 and the associated global pandemic has affected all of us in ways that were unimaginable only a short while ago.
“Our primary focus over the past eight weeks has been to protect our colleagues across all areas of our business and our customers. We have supported many good causes and we have kept over 300 stores open to serve the communities that most need our services at this critical time, including the NHS and the communities that rely on the Post Office services we provide on the high street.”
In its UK Travel business, the company has seen a significant decline in passenger numbers as a result of travel bans; the vast majority of our stores at airports and railway stations have been temporarily closed.
And although the ‘vast majority’ of airport and railway station stores have been temporarily closed, WH Smiths continues to serve NHS staff from c.130 stores located in hospitals across the UK and have extended its groceries range to provide further support for these key workers.
Internationally, the company is seeing broadly similar trends to the UK with all large airport stores closed.
In its high street business, 203 stores with Post Offices remain open, and its online businesses have also performed strongly, particularly in books where the company has reported a 400 per cent increase in sales during the past month.
But WH Smiths remains optimistic about the future of the business.
Carl Cowling said: “We were fast to react to the situation and issued new equity via a placing, raising c.£162m on 6 April 2020. We also secured an additional £120m of bank funding.
“We are a resilient and versatile business and with the operational actions we have taken including managing costs and the new financing arrangements, we are in a strong position to navigate this time of uncertainty and are well positioned to benefit in due course from the normalisation and growth of our key markets.”