- Retailer revealed talks to sell struggling high street shops on Monday
- But its travel arm is booming with strong sales in airports and train stations
WH Smith shares jumped on Wednesday as the retailer revealed strong growth in its travel business has continued to offset the ongoing decline of its high street business.
The group, which earlier this week revealed talks to sell its high street arm, saw like-for-like group revenues rise 3 per cent year-on-year in the 21 week period to 25 January.
Its travel arm, covering stores in airports and train stations, saw growth of 6 per cent and helped to offset an expected 3 per cent slump in high street sales.
WH Smith said it had a ‘clean stock position’ in its high street arm and on track to achieve its mission of making a saving £11million for the year.
The chain is ‘exploring potential strategic options for this profitable and cash-generative part of the group, including a possible sale’.
WH Smith said there was ‘no certainty that any agreement will be reached’, but added that it would provide updates on the possible sale.
Talks: WH Smith said it was in talks to sell its high street shops
It added: ‘Over the past decade, WHSmith has become a focused global travel retailer. The Group’s Travel business has over 1,200 stores across 32 countries, and three-quarters of the Group’s revenue and 85 per cent of its trading profit comes from the Travel business.’
According to Sky News, the owner of Hobbycraft, Modella Capital, is among a pack of suitors circling WH Smith.
It is understood Hilco and Alteri are among other parties to raise interest over a possible takeover move for the business.
The London-listed group employs around 5,000 people across its high street stores.
Travel business drives share price momentum
WH Smith said travel sales ‘remain particularly strong in air’ where revenue has been growing ahead of passenger numbers, up nine per cent versus the same period last year.
Chief executive Carl Cowling, said: ‘The Group has had a good start to the financial year, and we continue to see strong momentum across our core Travel business.
‘Our UK Travel business has delivered another excellent performance across all channels, as we continue to make good progress with the rollout of our one-stop-shop for travel essentials format.
‘In North America, we have seen a notable shift in like-for-like revenue growth, up 3 per cent, as a result of the actions we have taken to enhance our ranges and introduce new categories. We now have a new store pipeline of circa 60 stores in North America.
‘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.’
As of January 28, the retailer had purchased 1.4million shares for cancellation worth £17.5million as part of its £50million share buyback scheme.
WH Smith shares rose 5.77 per cent or 68.71p to 1,258.71p on Wednesday, having risen around 4 per cent in the last year.
Richard Hunter, head of markets at Interactive Investor, said: ‘A deteriorating economic outlook, especially in the UK, has been a notable headwind while geopolitical concerns have also had a detrimental effect on the travel sector as a whole.
‘At the same time, part of its product suite such as books can be purchased online prior to travel, while an increasing international business adds the potential complication of currency headwinds. These factors are quite apart from the growing competition for share of customer spend, especially at rail stations and airports.’
He added: ‘A fall of 15 per cent over the last three months has hindered a share price which was down by 3 per cent over the last year as compared to a gain of 6.6 per cent for the wider FTSE 250, prior to the positive reaction to this update in opening trade.
‘Indeed, the potential streamlining of the business and growth aspirations for the core Travel unit are sufficient temptations for investors, where the market consensus remains at a buy.’
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