WH Smith’s Travel Business Fuels Share Price Surge
WH Smith, the FTSE 250 retailer, experienced a significant boost in its share price, reaching £12.57 per share, a 5.6% increase, following the announcement of robust sales growth in its Travel business. This positive performance comes amidst a challenging retail landscape and underscores the company’s strategic focus on expanding its presence in travel locations such as airports, train stations, and hospitals. The Travel unit’s success has become increasingly crucial for WH Smith, contributing approximately 85% of the company’s overall profit. This dependence on the travel sector has prompted the company to explore strategic options for its less profitable High Street operations, including a potential sale, further solidifying the importance of the Travel business to WH Smith’s future.
For the 21 weeks leading up to January 25th, WH Smith reported a 3% increase in group revenues, or 4% at stable exchange rates. The Travel unit, the primary driver of this growth, saw a 7% increase in sales on a headline basis and 8% on a constant currency basis. This contrasts sharply with the performance of the High Street operations, where sales declined by 6%. This decline, however, was anticipated and aligns with the company’s expectations, reinforcing the company’s strategic shift towards its thriving Travel division.
Within the Travel business, the UK division, WH Smith’s largest, led the growth with a 7% increase in revenues both on a headline and like-for-like basis. This strong performance was attributed to the introduction of new product ranges, including food, extended health, and beauty products, which contributed to increased profitability. Airports proved to be a particularly lucrative segment, with revenue growth exceeding passenger number growth. This suggests that WH Smith is successfully capitalizing on the increasing passenger traffic in airports and effectively catering to traveler needs.
The positive momentum extended beyond the UK, with North American travel sales rising by 3% on both a headline and like-for-like basis. The company attributed this growth to strategic initiatives implemented to enhance product offerings and introduce new categories. Furthermore, travel sales in the rest of the world (excluding the UK and North America) experienced even more substantial growth, with a 12% increase on a headline basis and 9% on a like-for-like basis. This demonstrates the global reach and potential of WH Smith’s Travel business and its ability to adapt to diverse markets.
Carl Cowling, WH Smith’s Chief Executive, expressed satisfaction with the company’s performance, highlighting the strong momentum across the core Travel business. He particularly commended the UK Travel division’s excellent performance across all channels and noted the positive impact of strategic adjustments in North America. Despite acknowledging the prevailing economic uncertainties, Cowling expressed confidence in achieving another year of good growth in 2025. This confidence stems from the underlying strength of the Travel business and its resilience in the face of external economic pressures.
WH Smith’s strategic focus on its Travel business is further underscored by the company’s recent announcement regarding the exploration of potential strategic options for its High Street unit. Speculation surrounding a potential sale of the High Street business has intensified as the company increasingly prioritizes its travel-focused operations. With over 1,200 stores across 32 countries, the Travel unit has become the cornerstone of WH Smith’s profitability. This strategic realignment reflects the company’s adaptation to changing consumer behaviour and the growing importance of travel retail. The potential divestment of the High Street business would allow WH Smith to concentrate resources and investments on its thriving Travel division, further strengthening its position in this high-growth market. This shift in focus is expected to enhance the company’s overall financial performance and create long-term value for shareholders.
