Thursday, April 17, 2008

WH Smiths

UK High street retailer reported half year profit increased 8% on the strength of motorway, airport and train station outlets. Same stores sales slipped 2% however. Kate Swann, group chief executive said: “The economic environment remains uncertain and, whilst we continue to be cautious, we are confident in the outcome for the full year”.

From the TimesOnline:

WH Smith today gave a cautiously optimistic forecast for the rest of the year despite falling sales elsewhere on the high street after the 215-year old newspaper and stationary retailer reported profits above expectations and lifted its interim dividend by 24 per cent. Shares in the company rose 5.25p to 371p in early trading after it revealed pre-tax profits rose by 8 per cent to £64 million for the six months to February 29. City analysts had expected profits between £59 million and £63 million for the period.

From the Press Release:

• Group profit before tax up 8% to £64m (2007: £59m). Profits from trading operations are £50m1 in High Street and £17m1 in Travel.
• Group total sales up 2%, with like-for-like (LFL) sales down 2%, reflecting our strategy to
rebalance the mix of our High Street business towards our core categories:
• Travel total sales up 14%, with LFL sales up 1% (excluding tobacco, LFL sales up 3%)
• High Street total sales down 2%, with LFL sales down 3%
• Gross margin improved by 70 basis points year on year.
• First half High Street cost savings of £4m delivered, in line with plan.
• Good progress with return of £90m of cash to shareholders through a special dividend and on market share buyback programme.
• Strong free cash flow of £61m.
• Underlying2 earnings per share of 26.9p (2007: 25.8p).
• Basic earnings per share of 28.3p (2007: 26.7p).
• Interim dividend of 4.6p, up 24% on last year.

Commenting on the results, Kate Swann, Group Chief Executive said:
“We have delivered another period of good profit growth, with Group profits3 up 8%. We have seen further strong performance from Travel with substantial progress in new business development in the hospital, air and motorway channels. In the High Street, we successfully continue to deliver our strategy to rebuild our authority in our core categories."

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