WH Smith shares up on revenue and profit increase as travel recovers

WH Smith shares (LSE: SMWH) ended the day 3.7% higher at 1,233.00p after the retailer said revenue and profit both increased in its latest financial year as its Travel business continues to recover, signalling confidence with an increased dividend.

The London-based retailer said headline pretax profit for the year ended August 31 surged 96% to £143 million from £73 million the prior year. Group pretax profit increased to £110 million from £63 million previously.

Group revenue rose 28% to £1.79 billion from £1.40 billion last year, with total Travel revenue up 43% to £1.32 billion from £927 million. This demonstrates the ongoing recovery for WH Smith’s airport and railway station stores as global travel rebounds from pandemic lows.

Travel revenue in the UK increased 36% to £709 million, North America revenue rose 32% to £380 million, and Rest of World revenue jumped 99% to £235 million. The robust performance across all regions highlights the strengthening demand for travel retail as tourism picks up pace.

“This has been another year of significant progress for the group,” commented Chief Executive Carl Cowling. “Our global travel business is growing in all our key markets. It is highly scalable with multiple medium and long-term growth opportunities and we are seeing great results from sharing our expertise and innovation across our different geographies.”

WH Smith signalled its “confidence in future prospects” by hiking its final dividend to 20.8 pence per share, bringing the total payout to 28.9p. This is more than double last year’s final dividend of 9.1p, the first payout since suspending dividends in 2020 due to the pandemic’s impact.

“We have started the new financial year well with total revenue in Travel UK up 13%, North America up 15%, and Rest of World up 27%,” said Cowling. “With good trading and very positive prospects, despite the uncertainty in the economic environment, we are confident in the group’s outlook for the new financial year.”

WH Smith shares are down around 18% year-to-date in 2023 but remain down just 8% over the last 12 months.

With tourists returning en masse to airports and train stations where WH Smith stores are located, the retailer looks well-positioned to capitalize on the ongoing rebound in mobility and tourism spend. Doubled dividend payments also signal management’s confidence that profitability improvements will continue, supporting the share price bounce.