WH Smith’s shares surge as its travel business flies high
Susannah Streeter, head of money and markets, Hargreaves Lansdown: ‘’This snapshot of struggling sales across WH Smith’s high street estate shines a light on why management seem so keen to sell off its traditional stores and focus on its travel hub business, which is flying high. The difference in sales is stark. While shops across the transport network saw growth of 6%, high street sales fell back 6%, a highly disappointing mirror of a performance.
WH Smith is up against the same challenges which beset Wilko and even Woolworths. It’s a hugely competitive market for stationary, books, music and entertainment with online retailers typically able to undercut bricks and mortar stores with their higher overheads.
Travel outlets can benefit from a highly captive market with consumers prepared to pay for extra little treats, splash out on paperbacks or buy forgotten bits of electronic kit to make their trips that bit more enjoyable. WH Smith has been expanding this more lucrative part of its operations, and this will be front and centre for future prospects with a raft of store openings planned in the United States.
Investors are enthused by the travel arm’s continued success and are confident in the direction the company is taking. There are hopes that buyers will be found to remove what’s been more of a burden than a diversified blessing. However offloading outlets in struggling locations won’t be easy. Given the resonance of WH Smith with the UK public, it’s likely the brand will find a buyer if it’s sold. But it seems inevitable that the nationwide footprint will shrink pretty drastically.’’