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WH Smith is reportedly eyeing up a takeover of Dixons Carphone’s airport stores, after the electronics business closed 35 of its travel shops following the effects of the pandemic.
According to The Telegraph, Carl Cowling, WH Smith’s chief CEO, said the exit was “another opportunity” to roll out its own gadget chain, InMotion, across the vacant travel hubs as travel restrictions begin to ease.
He reportedly confirmed that WH Smith “was already talking to landlords to bring InMotion to more stores”, adding that the group is “really confident about the future of our travel business”.
InMotion was first acquired by the group in 2018 for £155m, as part of the group’s ongoing US expansion aim. The gadget store has already launched in the UK, with a branch at Leeds Bradford Airport.
Just last week, Dixons Carphone announced it was set to close its airport shopping business, only months after the UK government announced plans to remove airside tax-free shopping.
In a trading update, the electrical retailer said that it did not expect passenger numbers to “recover sufficiently” to compensate for the removal of the tax. This is despite the Dixon Travel chain, which has 35 branches across the UK, making an annual profit contribution of over £20m.
News of the potential takeover also comes as WH Smith unveiled a fundraise to open 100 new travel stores, launching a £325 bond offering in convertible bonds, despite reporting losses in its half-year results.
The group, which also secured a £250m revolving credit facility with an extended maturity to 2025, said the funds will aid the opening of its new travel stores both won and yet to open over the next three years, as well as new growth opportunities.
The remainder of the funds will be used to partially pay down its existing £400m of term loans from both the Marshall Retail Group and InMotion acquisitions.
The announcement followed publication of the group’s half-year results, when it reported a pre-tax loss of £17m in the period ending 28 February 2021. While its travel business swung to a loss of £31m in the period, this was partially offset by a High Street trading profit of £33m.
Despite plans to reportedly capitalise on the Dixon Carphone closures, its UK travel business has “continued to be impacted by a significant decline in passenger numbers” as a result of ongoing travel restrictions throughout the first half of the financial year.
