UK's WH Smith FY revenue beats estimates on higher rents

Overview

• UK travel retailer's preliminary FY revenue rose 5%, beating analyst expectations

• Headline diluted EPS before non-underlying items fell to 30.3p from 43.4p

• Profitability impacted by UK contract renewals, inflation and macro headwinds

Outlook

• WH Smith expects FY27 headline group profit before tax of £75m-£85m

• Company sees UK revenue flat, North America up low single digits, ROW down 10-20% in FY27

• Headline net debt expected to be around £320m at 31 August 2027

Result Drivers

• UK RENTAL COSTS AND INFLATION - Co said higher rents from competitive UK airport contract renewals and inflation pressured profitability

• STORE PORTFOLIO RATIONALISATION - Co attributed lower profits to ongoing transformation, including exiting loss-making stores and restructuring in all regions

• NORTH AMERICA SEGMENT MIX - Growth in North America driven by Travel Essentials, while Resorts and InMotion underperformed, leading to store closures and a shift in focus

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 8 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the miscellaneous specialty retailers peer group is "buy"

• Wall Street's median 12-month price target for WH Smith PLC is GBp420.00, about 1.7% below its November 11 closing price of GBp427.20

• The stock recently traded at 12 times the next 12-month earnings vs. a P/E of 11 three months ago

Reuters Recommended Reads

• Nov 11 - UK's Taylor Wimpey warns on annual profit as affordability woes deepen

• Nov 11 - ITV warns of up to 10% fall in fourth-quarter advertising revenue

• Nov 10 - M&S targets profit growth ahead of sales over medium term

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)