SHARES in WH Smith plunged more than 11 per cent after the retailer announced the closure of six stores following a review of its high street business.
The stationer cited challenging conditions as it reported a three per cent fall in profits from high street trading to £60 million for the 12 months to August 31.
While WH Smith said the result was the third-highest profit recorded by the division in the last 15 years, it carried out a review of its high street business which will lead to it closing six as yet unidentified stores, “particularly those impacted by onerous leases”. It will also end trial initiatives such as Cardmarket and WHSmith Local and “restructure some operational activities”.
The company put the cost of the changes at £9m.
WH Smith confirmed the ownership of its in-store Post Office counters in Aberdeen and Dunfermline will transfer to the company from the Post Office, subject to public consultation. Plans to open a further 40 Post Offices within high street stores were announced.
The company’s portfolio of high street stories stood at 607 at August 31, down from 611 one-year ago.
The results illustrated the continuing shift from WH Smith's high street to its travel business, which includes outlets in bus and railway stations. Its travel division reported a seven per cent increased in trading profit to £103m, which helped lift underlying group profit before tax by 4% to £145m. Travel stores now account for around two-thirds of the retailer’s profits.
George Salmon, equity analyst at stockbroker Hargreaves Lansdown, said: “WH Smith is a rare beast among the UK high street names in that it’s delivering continued underlying profit growth.
“But that performance masks the fact Smith’s high street division is facing some pretty tough challenges. Sales continue to slide, and six stores are due to close.
Mr Salmon added: “The travel business is attractive because it’s often one of only a handful of outlets available where consumers can grab a bite to eat, or something to read.
“This has proven a winning formula for sales and profit growth, and with plenty of blank space on the map, Smith’s travel business should remain an attractive roll-out story.”
Shares in WH Smith close down 234p, or 11.5%, at 1,800p.
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