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(Alliance News) - WH Smith PLC late Wednesday reported a weak interim performance against a backdrop of reduced footfall on the UK high street and extensive coronavirus-related travel restrictions in place.
For the half year ended February 28, revenue was down 43% to GBP420 million from GBP747 million the year before, leading to a pretax loss of GBP38 million, swinging from a profit of GBP63 million.
The Travel unit swung to a loss of GBP31 million from a GBP50 million profit last year, while the High Street arm delivered a profit of GBP33 million, down 30% from GBP47 million.
WH Smith said throughout the lockdown periods, it kept the vast majority of stores open, in line with UK government guidance which classes newsagents as essential retailers.
The company's travel unit operates stores in railway and bus stations, airports, hospitals and universities. It said Covid-19 restrictions continued to significantly hurt the business across both UK and international markets.
The Swindon-based retailer said it will not be paying an interim dividend.
Looking ahead, WH Smith said as lockdown restrictions ease and with footfall anticipated to increase, the it expects to improve the profitability of the business.
Further, due to better than expected performance in the period and the recent improving trends, WH Smith expects the financial 2021 outturn to be "modestly ahead" of current expectations.
"The speed with which the group will return to levels of revenue seen in 2019 will depend on the trajectory of the global economic recovery, but we currently expect 2019 revenue to be achieved within the next two to three years," WH Smith said.
"At that point, we expect the balance of revenue to be more heavily weighted towards Travel than High Street, and within the High Street business, we expect to see an increased weighting towards our online businesses. Overall, the business is performing well in difficult circumstances and we are confident that the business will recover to historic levels and beyond," the company added.
Also on Wednesday, WH Smith said it has successfully agreed new bank financing arrangements and launched a potential offering of around GBP325 million of guaranteed senior unsecured convertible bonds due 2026.
The new financing arrangements include a GBP250 million revolving credit facility - increased from GBP200 million - with an extended maturity from 2023 to 2025 and provided by an expanded syndicate of lending banks.
In addition, the issue of the bonds, which is expected to raise approximately GBP325 million, will provide GBP50 million of new capacity for WH Smith to fund the opening of 100 new Travel stores won and yet to open over the next three years and new growth opportunities, the company said.
The remainder of the proceeds will be used to partially pay down the existing GBP400 million term loans from both the Marshall Retail Group and InMotion acquisitions, it added.
The stock closed up 0.4% at 1,883.00 pence on Wednesday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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