Less than three years ago WH Smith, the chain once known for its chocolate promotions, magazines and stationery, had lost almost two-thirds of its stock market value as the pandemic damaged its UK high street business.
But now the retailer is reaping dividends from a transformation that means its typical customer is more likely to be picking up high-end headphones, a smartphone charger or some sushi – and may well be American.
The group, which in August 2020 was having to cut 1,500 jobs amid criticism of its lack of investment in stores, has now more than doubled profits in a year thanks to a bounceback in air and rail travel, expansion abroad, and an embrace of electronics and premium food ranges.
Profits at its North American travel arm are soaring – with an expectation it will overtake its British high street stores this year to become the group’s second most profitable division behind UK travel outlets.
The group’s sales in airports, train stations and hospitals jumped 75% to almost £600m in the six months to 28 February, while those made outside its established markets in the UK and the US tripled to £102m during the same period. That helped it to achieve pretax profits of £45m, up from £18m a year before.
Airport stores had the biggest increase in sales despite traveller numbers being down 15% on pre-pandemic levels. Sales in train stations outside strike days stayed flat, even though there were a fifth fewer passengers.
Sales at the group’s high street division dropped 1% to £266m, however. The company said a rise in physical store sales had been offset by a big decline at its online outlets including Funky Pigeon, which had benefited during the pandemic lockdowns.
Carl Cowling, the group’s chief executive, said it was persuading more shoppers to enter its doors and each visitor to pick up an extra item by widening its product ranges. He said: “Three years ago we just sold sandwiches, now we have Yo Sushi and premium wraps from Crush. More people are coming into WH Smith as they are seeing more products that might surprise you that we sell.
“We have now got pain relief, deodorant and toothpaste. People come in for one product and are finding something else that they want.”
WH Smith, which employs 14,000 people and has more than 1,700 stores worldwide including more than 1,000 in the UK and 320 in North America, said it expected to open 120 outlets in the year ahead – half of which would be in the US and Canada.
The group said its UK travel division also had “excellent growth prospects” as sales had risen above pre-pandemic levels in the half year and more people were expected to return to air travel, although train passenger numbers were expected to remain lower than before Covid-19.
The business is also expanding InMotion, the technology retailer it has built since buying Dixons’ airports chain in 2021 and which sells more expensive kit including computers, cameras and mobile phones as well as smaller items. It is already in Spain, Italy and Germany and will open in Sweden and Australia.
Cowling said: “Wherever we have got a WH Smith store we think there is an opportunity for a tech store.”
The group is also testing out a souvenir shop – curi.o.city – at Gatwick that it hopes to expand outside the UK if it is successful.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said: “WH Smith is benefiting from the snap back in travel with its outlets across train and airport networks much busier as demand for trips and holidays has rebounded.
“The pandemic hit the retailer hard, as trade evaporated while people stayed at home but now the shutters are well and truly up and it’s back to brisk business.”
Streeter said even the widespread rail strikes appeared not to have dented the bounceback, “with surging demand at airports offsetting the impact of delayed train journeys”. She added: “The pent-up demand for travel is showing up in these figures, with passengers clearly reserving cash to treat themselves to books, magazines and snacks on their long-awaited leisure trips.’’
