WH Smith will only just meet its guidance for £75m to £90m pre-tax profits in 2026, despite having lowered its outlook by £15m in June.
The travel retailer told investors this morning that while a “solid” summer peak of trading had boosted revenues 4% in the fourth quarter, full-year headline profit before tax and non-underlying items would come in at £75m.
UK revenues grew by 7% in the final quarter, with like-for-like sales up 4%.
WH Smith blamed an increase in promotional activity, lower marketing spend by brands and inflationary headwinds for the drop in profits, though said some had been offset by cost-cutting programmes and lower interest costs.
Actions to shore up the group’s balance sheet included its 10 June capital raise, when the company raised £103m by issuing new shares. The equity sale and underlying cash generation has helped WH Smith slash its debt burden.
Headline net debt fell around £170m from the end of H1 to around £325m at year end, reducing the group to a leverage rate of 2x.
Chris Beauchamp, chief market analyst at investing platform IG, said WH Smith investors had faced a “grim reality” over recent years as the company struggled to make the most of post-Covid recovery in travel.
“[Today’s update] is a reflection of the tough times in global travel thanks to higher prices and the Iran war,” he said.
“Having bet the farm on North America, the recovery in the UK market is not the news investors had wanted, and as the global backdrop worsens there is probably more bad news to come.”
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