WH Smith profits fall on US deal and restructuring costs

Retailer WH Smith has seen half-year profits fall 21% after being stung by costs linked to its acquisition of InMotion and a restructuring programme.

The high street chain saw pre-tax profit drop from £82 million to £65 million in the six months to February 28.

WH Smith booked £9 million in costs linked to the deal to buy InMotion, a US travel accessories retailer, and another £7 million linked to a restructuring.

In October, the firm outlined a cost-saving programme which will see it shut a handful of UK high street stores and call time on new initiatives, instead focusing on growth opportunities for its chain of stores based at airports and railway stations.

With those costs stripped out, pre-tax profit was down 1% to £81 million.

Sales rose 8% to £695 million, or 1% on a like-for-like basis.

In travel, WH Smith’s standout operation, total revenue rose 18% and 3% on a comparable basis. Profit at the arm was up 7% to £44 million.

High street revenue fell 1%, with like-for-like revenue down 2%, but this was the retailer’s second-best sales performance in the past decade and was driven by growth in Christmas cards, wrapping paper, diaries, calendars, and art and craft ranges.

Boss Stephen Clarke struck an upbeat tone.

“The group has delivered a strong performance in the first half of the financial year.

“The integration of InMotion is progressing well. This acquisition doubles the size of our business outside of the UK, where we are now present in 99 airports and 30 countries.

“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.”