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WHS 'over-delivers' with profits leap

11.10.07 Graeme Neill

W H Smith has "under-promised and over-delivered" with its 29% leap in pre-tax profits, according to an influential retail analyst.

Nick Bubb from Pali International was speaking after W H Smith's announcement that group revenue decreased from £1.34bn to £1.3bn in the year-ended 31st August, as the business focused on profitable sales, in what it called a "tough trading environment". The like-for-like sales decline over the year was 4%. High street sales dropped 6% to £961m, but travel was up 6%.

Bubb said that both the high street and travel divisions' operating profit had come in "stronger than expected". "The high street chain also saw a much better [second half] sales outcome, with [life for like] sales only down 1%, despite the deliberate withdrawl from entertainment sales, thanks to strong sales of books," he said. "We think the new-year has started well and though [WH Smith] are cautious about xmas, but they always are cautious and yet they always deliver."

The high street delivered a profit increase of 5% to £44m, which WHS said was in line with expectations. The travel shops saw profit increase by 16% to £36m. "This was achieved as a result of increased sales combined with improved gross margin and tight cost control," WHS said.

Despite the positive movement in profits, WHS' share price has dropped 7% so far in trading today.

Retail Financial W H Smith kate swann Graeme Neill

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