A new chapter

14 October 2004

The UK group s High Street stores had declining sales last year in spite of promotions that killed the operating margin. The group is slowly rebuilding its margins. But its sales are still falling, and Christmas is expected to be difficult once again.

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WH Smith said that profit before tax, exceptional items and goodwill amortisation was £67m, compared to £102m in the previous year. The UK retailer said that likeforlike sales at its UK retail operations, which include the highstreet stores and travel retail, fell by 1% in the period, while those at its news distribution arm rose by 4%. Total sales from continuing operations rose by 2%, but total base operation profits from continuing operations declined by 48% to £51m. The group said that the final dividend would be 8p, compared to 13p last year.

WH Smith said that the results were driven by underperformance at its core UK highstreet stores. It said that it has now strengthened management, reduced the cost base and taken action on the retailing front.

During the course of the year, WH Smith has sold several businesses, including USA Travel Retail, Aspac retail and its publishing business.

WH Smith said that current trading was in line with expectations. Likeforlike sales are down by 2%, but there has been some margin improvement. The group said it expects to face tough Christmas trading.

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