WH Smith to post loss after pandemic weighs on travel sales
6 November 2020, 14:14
The retailer is expected to report a pre-tax loss of between £70 million and £75 million for the year to August 31 on Thursday.
High street stalwart WH Smith is set to post an annual loss after the coronavirus pandemic hammered its travel stores.
The retailer is expected to report a pre-tax loss of between £70 million and £75 million for the year to August 31 when it reveals its latest trading figures on Thursday November 12.
Analysts at Investec have said they expect it to deliver a £73 million loss, describing 2020 as a “write-off” year for WH Smith.
In August the 228-year-old business said 1,500 jobs, around 11% of its workforce, could be axed after a dramatic fall in sales.
Its travel arm, which has boosted the group with rapid growth in recent years, has seen revenues slump on the back of global travel restrictions which are set to continue for the coming months.
“A near term recovery in travel seems unlikely”, according to Investec, but the brokerage stressed that it does not believe the travel market has structurally changed permanently and expects its recovery in the sector to become more clear next year.
In the UK, WH Smith’s high street stores have been battered by lockdown measures from March as well depressed high street footfall in more recent months.
Investors will therefore be particularly keen for an update of how bosses plan to steer the retailer through England’s second national lockdown, although the majority of its stores are expected to remain open through essential status.
Around 300 of its 1,600 stores were kept open after the first lockdown – primarily those in hospitals and with post offices attached – but the chain is expected to be better sheltered this time around after newsagents were given the green light to stay open.
“WH Smith should paint a picture of just how badly lockdown two is likely to hit sales in the crucial Christmas shopping period,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“Its travel division was the main driver for growth before the pandemic, so the prospect of deserted railway stations and airports for potentially many more months will be a bitter pill to swallow.
“There will be hope online purchases will make up some of the shortfall but competing with the might of Amazon won’t be easy.’’
