WH Smith says Covid-19 to hit sales by up to £130m
WH Smith said it believes the Covid-19 outbreak could knock up to £130 million off its revenues for the current financial year.
The retailer said it is also currently predicting that the outbreak will impact upon underlying pre-tax profits by between £30 million and £40 million for the year to August 2020.
WH Smith said it has had a “significant impact” on its Asia Pacific travel business, as well as a “material reduction in passenger numbers” at airport sites in the UK, US and Europe.
The update came as WH Smith reported that its fast-growing travel business helped offset high street decline to drive the group to sales growth over the past six months.
It said it believes Covid-19 will result in a “reduction in our expectations for revenue and profit across the travel business for the second half”, on the basis of a “challenging” third quarter and “modest normalisation” in the fourth quarter.
The retailer said revenues for its UK travel business are predicted to fall 15% below forecasts for the next six months, with a 35% decline in March and April.
It said it predicts sales in the US division and rest of its international business to fall 20% below forecasts for the half-year.
WH Smith also recognised that the virus “could result in reduced high street footfall”, but said it has not yet seen a significant impact on the high street arm.
The historic retailer reported that group total revenue increased by 7% in the six months to February 29, with like-for-like revenues down 1%.
It said this was driven by its travel business, which saw sales increase by 19% with like-for-like sales growth of 2%.
Meanwhile, its high street business saw revenues fall 5% with like-for-like revenues down 4%.
In a trading update, the company said: “WH Smith is a resilient business with a strong balance sheet, substantial cash liquidity and strong cashflow.
“The group has a strong management team in place and has consistently demonstrated that it can adapt and respond quickly to changing market conditions.
“Over the longer term, the board remains confident in the strategy and believes the group is well positioned to benefit from the normalisation and growth of the global travel market.”