WH Smith high street profits plunge ahead private equity sale
- WH Smith name will disappear from the high street after sale to Modella Capital
WH Smith has seen trading profits in its bricks and mortar high street arm plunge by 30 per cent ahead of the unit's agreed sale.
The retailer's high street trading profit came in at £15million by the end of the period, down from £22million at the same point a year ago, as revenues dipped 3 per cent and 18 stores were closed.
Total sales across the firm's high street division reached £239million, down from £256million the previous year.
WH Smith is gearing up for its sale to private equity firm Modella Capital, which also owns Hobbycraft.
It comes as the retailer focuses on its lucrative travel business, which has seen sales soar across airports and train stations as high street trade has gradually withered.
The name WH Smith is set to disappear from the High Street after the sale. The new owner has said it will keep the Post Office outlets that operate in many branches, but will rebrand the High Street chain as TGJones.
The WH Smith name is not being sold and will still be used at the airport, railway station and hospital outlets that are also not for sale.
Modella Capital will take over 480 stores in retail parks, shopping centres and on high streets, including 5,000 staff.
Struggling: WH Smith's bricks and mortar high street arm saw its trading profit fall by 30%
WH Smith also saw sales growth across its lucrative travel arm slow slightly in the six months to the end of February, easing from 7 per cent in the first quarter to 6 per cent in the second.
The retailer said it planned to open 90 new stores across its travel division, including over 70 in North America. It expects to open over 60 stores this financial year.
WH Smith said it expects its full-year results to be in line with market forecasts, buoyed by demand for travel.
The retailer said the second half of its financial year had started well.
WH Smith’s chief executive, Carl Cowling, said: 'We are well positioned for the peak summer trading period and continue to benefit from growth opportunities in global travel retail.'
The group reported a pre-tax profit of £45million for the first half of the fiscal year, against £46million a year ago.
WH Smith shares fell 3 per cent or 28.50p to 922.00p on Wednesday, having fallen by around a quarter in the last year.
Richard Hunter, head of markets at Interactive Investor, said: 'The recently announced sale of the high street business is strategically sound and establishes a clear direction of travel for the remaining units.
'The unit had been something of a drag on the group more recently, with store closures, margin pressures and faltering progress in sharp contrast to the Travel business.
'Given the general pressure on the high street, let alone the question marks over the UK consumer’s propensity to spend this year, the potential exit of the high street business could have come just at the right time.'
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
