WH Smith (SMWH) continues to shine amid gloomy UK retail market

Despite positive results, the shares were down following the CEO’s announcement of his departure.

Article updated: 21 May 2019 11:00am Author: Helal Miah

  • CEO announces he will step down later this year after successful six year tenure.
  • A shift away from the high street to travel hubs with large numbers of captive passengers.
  • Total group sales up 15% over the last 11 weeks , with travel division performing strongly.

WH Smith is one of the few retailers that have provided positive news for several years, bucking the trend on the high street. A shift away from the high street, to travel hubs that service increasing numbers of captive passengers making impulse purchases, is a contributing factor. This is a trend likely to continue with international expansion fuelled by further investment. In the 11 weeks preceding last week, total group sales were up 15%. Their travel division saw sales up 26% while like for like sales were up 3%. However, for the high street business, like for like sales were down 1% with focus on cost reduction.

This morning saw the announcement the long serving CEO, Stephen Clarke, will step down later this year, understandably investors were disappointed with the shares down as a result. During his tenure there has been amazing growth for the retailer in the context of a gloomy retail sector, the shares have climbed more than fourfold since 2012.

WH Smith’s outlook remains positive

While we don’t have a formal recommendation on the shares, it is one we have looked upon favourably and I take the view that there is more to come. Occasionally the company has benefitted from fads such as adult colouring-in books, and while the broader political environment is a concern, the management believe they are well placed for this summer. Market consensus is for another year of sales and profit growth. Therefore WH Smith is a share that investors could look at for a more upbeat exposure to the UK retail sector with a reasonable dividend too.

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Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment.