Can Britain’s least favourite high street store WH Smith (LON:SMWH) produce something worth reading with next Wednesday’s Q3 statement?
Given that the company ended 2017 at an all-time high, it was always going to be a tough year to follow. Still, WH Smith will be disappointed in how things have gone. Opening the year at £23.26, by the aftermath of its interim results in mid-May the stock was trading at £18.60, its worst price for 7 months.
And though it has bounced back somewhat from that 2018 low, news at the end of May that it had been voted the worst high street retailer by Which? readers capped its climb. WH Smith PLC now sits at a current trading price of £19.85, a 14.6% decline since the start of the year.
In many ways those interim results were pretty typical for present day WH Smith. A healthy showing from the increasingly important Travel division, with a 7% jump in total sales and a 3% rise in like-for-likes, was paired with a now-standard 5% drop in High Street sales and a 4% slide in LFLs. The company complained of a lack of ‘publishing trend’ to match the previous year’s ‘strong sales of humour books over Christmas’.
This left the firm with flat group revenue, a 1% slip in comparable sales and, perhaps most troubling for investors, a 1% dip in pre-tax profit to £82 million. WH Smith did try and reassure the market that it was confident in its current performance by hiking its half year dividend by 10% to 16.0p per share, but this couldn’t prevent the stock from slumping to that aforementioned 7 month nadir.
As for next Wednesday’s third quarter figures, investors will at the very least want to see that the high street decline hasn’t worsened, and ideally has slowed back to the 3% mark. The Travel division sales growth could also do with accelerating to the levels seen in 2017.
WH Smith PLC has a consensus rating of ‘Buy’ alongside an average target price of £20.81.
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