WH Smith (SMWH) has moved to shore up its finances with a planned capital raise after cutting full-year profit guidance for the second time in three months, as weakening trading conditions and pressure in North America weigh on performance.
The retailer’s shares slid 16% to 412.60p by the London close, extending a year-to-date decline of around 35% as investors reacted to both the downgrade and the proposed funding plan.
The group now expects headline pre-tax profit before non-underlying items of between £75 million and £90 million for the year ending 31 August, down from £108 million in the prior year.
This marks a further downgrade from April, when guidance was reduced to £90 million to £105 million, highlighting continued deterioration in trading momentum.
The company attributed the latest cut to ongoing uncertainty linked to the Middle East conflict, softer passenger volumes, and persistent margin pressure across divisions, with North America once again identified as the weakest area due to lower footfall and reduced consumer spend per traveller.
Revenue for the 14 weeks to 6 June rose 5% on a constant currency basis, with like-for-like sales up 2%, although momentum slowed towards the end of the period as like-for-like growth eased to 1% in the final seven weeks.
The UK division delivered stronger performance, with constant currency sales up 5% and like-for-like growth of 2%, improving to 4% in the final seven weeks. North America was weaker, with sales up 10% on a constant currency basis but down 1% like-for-like over the 14-week period, deteriorating further to a 4% decline in the final seven weeks as passenger numbers softened and airline capacity tightened.
The company said inflationary pressures, reduced marketing spend, and heavier promotional activity are continuing to compress gross margins, while North America now assumes full-year revenue growth of 4% to 6% and a headline trading profit margin of around 5%, with other divisional assumptions unchanged.
Alongside the trading update, WH Smith flagged a significant non-cash impairment charge of up to £150 million for the financial year, linked to goodwill and store-level write-downs, reflecting restructuring actions including exiting or renegotiating lower-return operations and shifting towards franchising in smaller markets.
To strengthen the balance sheet, WH Smith plans to raise around £104 million through a placing of up to 26 million new shares, representing roughly 20% of existing share capital, alongside a subscription from certain directors and a retail offer. The placing will be conducted through an accelerated bookbuild at prevailing market price.
The fundraising will be led by Barclays, Goldman Sachs and JP Morgan as joint global coordinators, while Merrill Lynch is acting as financial adviser, with participation expected from major shareholders including Causeway Capital Management on a pro-rata basis.
WH Smith said the capital raise is intended to strengthen the balance sheet, reduce leverage to around two times by the end of the 2026 financial year, and support future growth opportunities while reducing reliance on debt funding.