WH Smith Bucks Brexit With Spoof Humor Books, Travel Hub Salesby
Shares gain most in a year as retailer sees profit boost
“Five Go to Brexit Island” biggest selling Christmas book
WH Smith Plc, the U.K. retailer that’s among the world’s oldest, showed that Britain’s Brexit vote is having little effect in its performance as strong demand at train-station and airport shops drove sales higher.
Like-for-like sales rose 2 percent for the 21 weeks to Jan. 21, the 225-year-old retailer said Wednesday, with 5 percent growth at its travel stores offsetting a 3 percent drop in main- street outlets. Full-year profit growth is likely to be “slightly ahead of plan,” it also said, sending the shares up the most in a year.
Growth “was driven by a particularly strong performance in travel, good margin growth in both divisions and, as always, a good, tight handle on the costs,” Chief Executive Officer Stephen Clarke said in a telephone interview. “We’re still here. We’re still standing.”
The stock rose as much as 7.8 percent to 1,596 pence, the steepest intraday gain since Jan. 20 last year.
While the U.K.’s vote to leave the European Union has unsettled the likes of clothing retailer Next Plc and Restaurant Group Plc, WH Smith has so far weathered economic uncertainty and inflationary pressures. Cost cuts have boosted profit in both the main-street and travel stores, and the shares are eclipsing that of an index containing Apple and Google. A further 19 million pounds ($24 million) worth of savings are set to be implemented over the next three years.
The Swindon, England-based company’s announcement was stronger than expected and “very reassuring for the market,” RBC Capital analysts said in a note.
The retailer is on course to open 20 new travel stores in the U.K. and a further 30 overseas this year. WH Smith benefited from the fall in the pound, with foreign-exchange movements contributing 3 percent of total sales growth. Clarke said the company was “really well hedged” for the financial year ending Aug. 31.
Stationery and “spoof humor books” drove sales in its shopping-street stores, helping supplant sales of adult coloring books, which were popular during last year’s Christmas shopping season. The biggest seller was “Five Go to Brexit Island,” a parody of Enid Blyton’s Famous Five Novels, Clarke said.