In less than three years, WH Smith had lost two-thirds its value on the stock market as the pandemic harmed its UK high street businesses.
Now, the retailer is reaping rewards from a transformation. Its typical customer may be American and more likely to buy high-end headphones or a smartphone charger.
In August 2020, the group was forced to cut 1,500 jobs due to criticism over its lack of investments in stores. Now, profits have more than doubled in a single year, thanks to an increase in air and train travel, international expansion, and a focus on electronics and premium foods.
The profits at its North American Travel division are surging. It is expected that it will surpass its British high-street stores this year and become the second most profitable group division, behind UK travel outlets.
Sales in airports and train stations, as well as hospitals, grew by 75% in the six-month period ending 28 February. Meanwhile, sales outside the established markets of the UK and US, tripled in that time to £102m. This helped it achieve a pretax profit of £45m. It was up from PS18m the year before.
The airport stores saw the largest increase in sales, despite a 15% drop in traveler numbers compared to pre-pandemic. Train stations saw no change in sales outside of strike days, despite a 5 percent decrease in passengers.
However, sales at the high street division of the group fell 1% to £266m. The company reported that a growth in sales at physical stores was offset by a decline of a large amount online, including Funky Pigeon which benefited from the pandemic-related lockdowns.
Carl Cowling, chief executive of the group, stated that it is attracting more customers and encouraging each customer to purchase an additional item by expanding its product line. He said, “Three year ago, we only sold sandwiches. Now we have Yo Sushi premium wraps and Crush. More people are visiting WHSmith as they see more products, some of which may surprise you.
We now have pain relief, toothpaste and deodorant. “People come in to buy one product, but end up buying another.”
WH Smith, which employs more than 14,000 people, has over 1,700 stores in North America and the UK, including more than 1,000. It plans to open 120 new outlets this year, with half in the US.
The group’s UK travel division has “excellent growth prospects”, as the sales have risen over pre-pandemic levels during the first half of this year. More people are expected to travel by air, but train passenger numbers will remain lower than they were before Covid-19.
InMotion is expanding, too, the technology retailer that it built after buying Dixons airports chain 2021, and which sells higher-priced kit, including computers, mobile phones, and cameras, as well as smaller products. The company is already present in Spain, Italy and Germany. It will soon open in Sweden and Australia.
Cowling said, “We think that wherever we have a WH Smith we can open a tech shop.”
The group also hopes to expand its curi.o.city souvenir shop outside of the UK, if successful.
Susannah Streeter is the head of money markets at Hargreaves-Lansdown. She said: WH Smith’s outlets are much busier, as the demand for holidays and trips has recovered.
The pandemic was a major blow to the retail sector, with sales plummeting while customers stayed home. But now that the shutters have been put up, business is booming.
Streeter stated that even widespread rail strikes did not seem to have affected the rebound, with “surging demand at airports counteracting the impact of train delays”. Streeter said that even the widespread rail strikes did not seem to have affected the bounceback, “with surging demand at airports offsetting the impact of delayed train journeys”.