Key facts
- WH Smith expects full-year pre-tax profits between £75 million and £90 million, down from prior guidance.
- The company plans to raise approximately £100 million through a new share issuance.
- Revenues at WH Smith's North American airport operations fell 2% year-on-year in the seven weeks to June 6.
- A £150 million non-cash impairment charge will be recorded.
- WH Smith will close some unprofitable stores in Europe and North America.
WH Smith has warned of lower profits and plans to raise £100 million through a share issue, citing falling shopper numbers in US airports amid the Middle East conflict. The retailer expects full-year pre-tax profits between £75 million and £90 million, a reduction from its prior guidance of £90 million to £105 million. This downward revision is attributed to a downturn in trading conditions, including a decline in passenger numbers and weakening consumer demand across all divisions.
The company, which operates approximately 1,200 outlets in airports, railway stations, and hospitals globally, announced plans to raise about £100 million through the issuance of new shares. The funds are intended to strengthen its balance sheet, reduce debt, invest in technology, and close unprofitable stores.
Revenues at WH Smith's airport operations in North America have fallen by 2% year-on-year in the seven weeks leading up to June 6. While UK airport store revenues remained flat during the same period, the overall group revenue saw a 1% increase year-on-year. The company anticipates no near-term improvement in consumer confidence and assumes continued jet fuel supplies.
WH Smith also plans to record a £150 million non-cash impairment charge following a business review and intends to close some stores in Europe and North American resorts. Executive Chair Leo Quinn stated that the company is initiating a 'self-help' program to exit or renegotiate loss-making or low-return situations, and where appropriate, replace directly run operations with franchises in sub-scale markets. The company sold its 480 high street stores last year, which are now rebranded as TG Jones.
UK's main FTSE indexes hovered near three-week lows as investors eyed a fragile ceasefire in the Middle East and mulled company outlooks. WH Smith shares tanked 16.4%, marking their lowest level since late 2010, after the company cut its annual profit forecast for the second time in two months and launched an equity raise. Banks were among top sectoral decliners, with HSBC and Standard Chartered shares falling due to concerns over Beijing's tighter capital controls. Crude prices remained steady despite Middle East tensions, while investors priced in a potential Bank of England interest rate hike by September.