Apr 11, 2019
WHSmith finds travel broadens margin and revenue lines
UK train commuters who are used to a 99p price tag on a 65p packet of Polo mints will be unsurprised by the 40 basis point improvement in WH Smith's travel store margins, and the forecast-beating 7 per cent rise in its half-year travel store profit, to £44m. However, for WH Smith, the journey is no longer about Polos but paracetamol and headphones. While it is no longer possible to travel in the UK without WH Smith offering you a giant chocolate bar with a Brexit supporting broadsheet, there is potential for international expansion of its various brands. WH Smith International added another 17 units in the last half year, and InMotion gained 4 new units in the US, plus its first two outside North America. As a result, international sales took off: up 76 per cent to £104m. Trading profit was only £6m, as US travel sales are less profitable - the higher technology product mix at InMotion cut the travel operating margin by 120 bps. Boss Steve Clark says rent reductions of 33 per cent have been achieved, and 15-20 stores now trade rent free, as landlords need a WH Smith more than a vacancy and a rates bill.
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