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Activist investor Palliser has reportedly acquired close to a 5% stake in WH Smith, worth about £65m at its current share price, according to reports from Sky News.
Palliser is thought to hold WH Smith’s management team, led by chief executive Carl Cowling, in high regard with the move coming just weeks after the retailer sold off its historic retail business.
Despite this, the investment fund believes that returns to WH Smith shareholders could be bolstered through a series of self-help measures. These included reviewing the travel retailer’s leverage targets and capital allocation policy to ensure better use of its balance sheet.
The firm is also hoping to improve investor communication and disclosure, as well as overhauling its executive incentive structure to align it more closely with the interests of shareholders.
Palliser is also believed to see WH Smith’s potential to expand in the US as an attractive proposition. The company thinks that there is scope for its shares to nearly double in value in the next three years.
Shares in WH Smith are still trading comparable to the lows seen during the pandemic when global travel was effectively shut down for long periods. However, this is not unique to WH Smith as transport catering group SSP is experiencing similar.
Earlier in the year WH Smith sold its retail arm, comprising about 480 stores and roughly 5,000 staff, to Modella Capital. The retail arm is set to be rebranded as TG Jones.
Retail Sector has contacted WH Smith for comment.
