WH Smith has been one of the UK’s most popular High Street chains for many years now, with consumers frequently turning to the retailer for their stationery and reading needs. However, like many during the recession the retailer struggled to lift sales – a trend which, fortunately, appears to have come to an end, as WH Smith has this week posted a significant rise in full year profits.
During the year to the 31st of August, pre-tax profits climbed by 9 per cent to £112 million, although group like for like sales fell by 3 per cent to £1.16 billion. This was due to the exclusion of new store openings, which have largely taken place in transportation hubs such as railway stations and airports.
In fact, it seems that the losses on WH Smith’s traditional stomping ground – the High Street – are more than being made up for by the retailer’s growing focus upon its travel division which saw 30 new openings last year. It has announced that, rather than focusing on expanding its traditional store network on the High Street, it will instead invest in opening new stores within hospitals, stations and airports, with 20 new locations set to open in the 2014-2015 financial year.
Group chief executive Stephen Clarke expressed his pride in what he called a “strong performance” during his first year at the helm.
He said; “The Group has delivered a strong performance with EPS [earnings per share] up 18 per cent year on year.”
“The distinct strategies for each of our businesses continue to deliver good profit growth.”
“Looking ahead, our focus will remain on profitable growth, cash generation and investing in new opportunities that position us well for the future.”
WH Smith will not only be looking to expand its UK store portfolio, however, as its desire to focus upon the travel division has seen its popularity overseas grow exponentially. According to the annual report, it has made great progress in target markets such as Australia, India and the Middle East, with 138 overseas outlets already open and a further 27 in the pipeline for the coming year.
The retailer is also keen to expand into the lucrative gifts market, and has confirmed that it will soon commence a trial scheme which will see a chain of low-cost greeting card stores, known as Cardmarket, introduced to the High Street. Although details have not yet been released regarding the number of stores WH Smith will initially launch, it is believed that the initiative is a direct result of the success seen by newsagent franchise, WH Smith LOCAL, which is now operational in 30 different UK locations.
In a statement, the group revealed a little more about what the card outlets will offer.
It said; “In contrast to our existing greeting cards offer, which is at the premium end of the market, these stores will provide customers with a value based proposition in this growing part of the market.”
Do you think WH Smith’s card franchise will succeed – bearing in mind greeting cards retailers were hit particularly hard during the recession?
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