WH Smith shares down 5% after 2022 profit caution
By Dan Moore
07:51, 1 September 2021
Investors responded to a WH Smith trading update which raises full-year 2021 guidance, amid concerns about how lingering pandemic-related issues will affect sales in 2022.
As a result of the caution about prospects over the next 12 months, the share price dropped 5% early on Wednesday to £15.48.
WH Smith’s concerns are the direct result of the impact of coronavirus. It stated: “We remain confident in revenues returning to pre-COVID levels in the next two to three years. While there will be a return to good levels of profitability in the year ending August 2022, the trajectory of the recovery in travel remains uncertain.”
Strong travel-related revenues
The company further added: “This combined with the previously announced accounting finance charges relating to the successful convertible bond issue on 29 April 2021, means that we currently anticipate the levels of profitability for the year ending August 2022 will be at the lower end of market expectations.”
Despite the longer-term prospects, the UK newsagent stated it expects figures for the year to 31 August to be slightly above the expectations outlined on 8 July, with strong showings in the key travel and high street segments.
WH Smith travel reported a 55% rise in revenue for the second half of the year, up from the 41% travel revenue increase in H1, both compared with the corresponding period of 2019. Sales as a percentage of travel-related revenue has also been creeping up, rising 30% in H1 and 38% in H2, year-on-year.
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Internet business boost
High-street revenue increased between the first half, where increases of 82% were realised, rising in H2 to 85%, compared with the corresponding period of 2019. In both cases, the company benefited from a relaxation of pandemic restrictions and its growing internet business.
In its latest trading statement, the retailer said of the future: “Although the pace of recovery varies across our markets, we are financially strong and well placed to capitalise on the multiple growth opportunities in our key markets.”
WH Smith will publish its preliminary results for the year ending 31 August on 11 November 2021.
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Read more: UK retail sales decline due to continuing COVID-19 concerns – ONS
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