After a sharp drop early on, WH Smith shares were relatively settled for the central part of 2018, ranging between £19 and £21. Things went a bit haywire as the year started to wrap up, however, with a post-full year results plunge in mid-October taking the stock to £17, only for a bit of M&A action to propel it back to £21 by the start of November.
Then the book retailer suffered the same fate as many of its retail peers in December, that market-wide dive leaving it at a 17 month low of £16.71. It has rebounded slightly since 2019 got underway, with WH Smith shares now at a current trading price of £18.56 .
Most of October’s full year update was business as usual. With an 8% rise in Travel revenue and a 3% decline on the High Street, Group revenue rose 2% to £1.26 billion, while like-for-like sales were flat as a 3% increase at the former division was cancelled out by a 3% drop at the latter. As for pre-tax profit, that fell 4% to £134 million.
No, what really bothered nervy investors were the costs associated with restructuring its ailing high street business. Having spent £9 million across its financial 2018, WH Smith revealed it would splash another £5 million on trying to sort the division out, a process that includes closing 6 stores and winding down its Local outlets. This news appeared to outweigh the announcement of a £50 million share buyback.
The company’s trading statements are fairly predictable at this point; the only surprise tends to be the scale of the discrepancy between the Travel and High Street businesses. Given that the reporting period covers Christmas, investors may be after an above-average performance from the latter.
Any comment on the company’s plans for InMotion Entertainment, the US airport retailer WH Smith bought for $200 million in October, and how i might allow the core brand to enter America will also be welcome.
WH Smith shares have a consensus rating of ‘Buy’ alongside an average target price of £21.58.
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