WH Smith shares rise - but stark gap between high street and travel stores shows weakened hand for sale of shops
The group said total high street sales dropped 6 per cent while travel shops saw 6 per cent growth
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Your support makes all the difference.Retailer WH Smith has revealed sales at its high street estate remain under pressure just days after the group confirmed talks to sell the 500-strong chain.
The firm said total high street sales dropped 6 per cent in the 21 weeks to January 25, covering the key Christmas season, down 3 per cent on a like-for-like basis.
It comes after the historic UK business confirmed over the weekend that it has held talks about potentially selling its high street stores to focus on its larger travel operation.
While that is only one portion of the overall operations of the group, analysts have warned the combination of falling high street sales and the wider economic outlook make it a tough moment to try and land a good deal in selling its shops.
Shares rose more than six per cent on the London Stock Exchange in early morning trading, as while high street sales were poor, the other side of the business continues to look impressive.
The group said the fall in high street sales was in line with its expectations while it added that its travel shops based in airports, railway stations and hospitals delivered an “excellent performance” with like-for-like sales up 6 per cent in the five-month period. This helped revenues overall rise 3 per cent on a same-store basis.
The group said the high street arm came out of the Christmas trading season with “a clean stock position and we are on track to deliver our targeted full-year cost savings of £11m”.
Carl Cowling, group chief executive of WH Smith, said: “The group has had a good start to the financial year and we continue to see strong momentum across our core travel business.
“The group is in a strong position, and while there is some economic uncertainty, we are confident of another year of good growth in 2025.”
But the results lay bare the challenge facing the high street arm, which has seen trading flag in recent years, with the group cutting costs and shutting unprofitable shops in response.
Its woes have been compounded by the recent Budget announcements that will send its wage bill soaring by £20m.
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Earlier this month, WH Smith said it plans to close 17 of its high street shops during 2025, having shut 14 in the past financial year.
The high street business now accounts for only around 15 per cent of annual group trading profit, with the travel division having overtaken it as WH Smith has expanded it into North America and worldwide.
Private equity suitors are among those said to be circling the high street division, with around 5,000 workers employed across the stores now facing uncertainty.
It is understood Hilco and Alteri are among parties to raise interest over a possible takeover move for the business, after WH Smith launched the process late last year.
Both Hilco and Bensons for Beds owner Alteri have experience in UK retail as turnaround specialists, raising concerns among some staff over what a private equity takeover deal would mean for the future of the WH Smith high street estate and workforce.
Hobbycraft owner Modella Capital is also said to have held talks with WH Smith and its advisers, while reports suggest Canadian billionaire Doug Putman, who owns music retail chain HMV, is another to consider throwing his hat in the ring.
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