US deal puts dent in WHSmith profits

WHSmith’s profit before tax dropped by 21% to £65m, following the retailer’s acquisition of American airport store In Motion for £155m late last year. According to its interim results for the six months ended 28 February 2019, excluding In Motion, its travel revenue saw its profit rise 7% to £44m and the company said it expected continued strong profit growth in the second half – slightly ahead of expectations. Headline group profit before tax fell by 1% to £81m despite group revenue seeing an 8% increase to £695m. Its high street total revenue was down 1% with like-for-like revenue down 2%, which WHSmith described as its “second best sales performance in the past decade”. High street profit was in line with expectations at £48m and it expected continued growth in the second half of the financial year. Stephen Clarke, group chief executive, said: “The group has delivered a strong performance in the first half of the financial year. In travel, we continue to see strong sales growth, up 18%, driven by our ongoing investment and initiatives in our UK business and our growing international businesses. As a result, profit in travel was up 7% in the period. “The integration of In Motion 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. We won a further 21 units in the period, including two In Motion units in Australia and Spain, highlighting the potential of this business outside of the US.” He added: “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. “These results are only possible through the hard work of all of our teams across the business and I am sincerely grateful for everyone’s continued support. 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.”