WHSmith reported solid results for the six months ending 28 February 2019, with like-for-like revenue in its Stationery category up 2%, with gross margin also higher than last year.
The retailer put this growth down to several factors: opening up more and better quality space for stationery within its high-street stores; strong promotional offers, and an increased focus on design, fashion and quality products.
The retailer reported that Stationery remains an important area of investment in its High Street business, and now generates half of High Street sales and over 60% of store contribution. It added that the market for stationery remains robust, particularly for its fashion stationery, and its seasonal stationery and art and craft ranges all performed well over Christmas. Recent trials to further improve the Stationery category across both larger and some smaller stores delivered some encouraging results for the retailer.
Stephen Clarke, group chief executive of WHSmith, commented: “High Street delivered one of our best trading performances in recent years, despite the widely reported challenges facing the UK high street, with LFL sales down 2%.
“This has been driven by good growth in seasonal stationery ranges including Christmas cards, wrap, diaries, calendars and our latest fashion and art and craft ranges.”
Clarke concluded: “While there is uncertainty in the broader economic and political environment, we have made a good start to the second half of the financial year and the increase in the interim dividend by 8% reflects the Board’s confidence in the outcome for the full year.”
The board revealed that the High Street delivered a good performance in the first half, with trading profit in line with expectations at £48m (2018: £50m). Like-for-like revenue was down 2%, with total revenue down 1%. The board reported that cost savings of £4m were delivered in the half with a further £5m identified for the second half, making a total of £9m for the year, in line with plan. The group continues to see savings in rent at lease expiry, with average rent reduction at 33%. On the high street they have over 300 leases expiring over the next three years.
At the end of February 2019, the retailer was operating from 578 WHSmith stores.
The retailer is also growing its stationery business through a number of digital initiatives:
funkypigeon.com, its online personalised greetings card business, which performed well over the key seasons delivering good revenue and profit growth.
whsmith.co.uk, which saw strong sales growth in its stationery ranges. During the second half, the retailer announced it will launch a new website providing customers with more ranges and an improved shopping experience.
cultpens.com, its specialist pen website, which performed well in the period. It will continue to develop this business and grow sales.
On WHSmith’s group results, Fiona Cincotta at www.cityindex.co.uk commented: "Although profit growth has once again alluded WHSmith, the company is laying the groundwork for a stronger earnings performance in the years to come.
“Costs associated with the InMotion acquisition were to be expected, while spending on restructuring efforts has helped stablise WHSmith’s weaker high-street business.InMotion has contributed a modest £2m to trading profit, but the acquisition was only completed at the end of November and the integration of the business appears to be progressing smoothly.
“WHSmith still expects to open 20 new travel-division stores in the UK in the current financial year, but the international business is showing the greatest potential for growth.
“A crucial plank of WH Smith’s strategy will be its ability to keep convincing airports that they’ll benefit financially from offering it some of their selling space. So far, it’s been doing a good job, with 17 new offshore units won in the first half, including the first InMotion stores won outside the US.”