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WH Smith has posted a 28% jump in total revenues last year amid a strong rebound of travel sales following the relaxing of Covid restrictions.
Total group revenues were up 28% in the year to 31 August, with first half growth of 41% moderating to 17% in the second half of its financial year.
Total like-for-like sales were up 18% after growth of 11% in the second half.
The jump in sales was driven by the retailer’s travel business, which was up 42% for the full year – with growth of 75% in the first half and 23% in the second half.
Like-for-like travel sales were up 27% for the full year, with strong growth in all regions.
WH Smith said that the shape of the sales performance in the year reflected much stronger passenger numbers in the second half compared with the first half of 2022, which included the impact from the Omicron variant.
The travel businesses continued to benefit from the recovery in passenger numbers across all key travel markets.
In the UK, it saw continued strength in air passenger numbers in the peak holiday season, building on the recovery in passenger numbers that we saw in the second half of the previous financial year.
Its hospital channel is performing well, and it said its rail channel had been resilient in view of the ongoing industrial action impacting rail. During the year, it opened 20 new stores, including eight new stores in hospitals. It anticipates opening over 15 new stores in the financial year ending August 2024.
Its North America and Rest of the World regions continued to show good momentum, while also reflecting the strength in sterling. The North American travel market, which recovered ahead of other markets, has returned to normal trading patterns.
During the year, the business opened 43 stores in North America, and has had further recent significant tender wins, including four stores at San Diego Airport.
In the financial year ending 31 August 2024, it anticipates opening over 40 new stores in North America and 25 new stores in the Rest of the World.
Including its UK Travel business, it anticipates opening over 80 new stores across in the financial year ending August 2024, “demonstrating the growth prospects in Travel across all our geographical markets”. We continue to be active in a number of ongoing tenders.
Meanwhile, High Street sales were up 1% for the full year on a like-for-like basis and down 1% on a total basis.
The group’s annual results will be published on 9 November.
Morning update
Ready meals player Bakkavor has posted a “strong” start to its financial year despite “tough” market conditions, resulting in upgraded guidance for the rest of the year.
Posting its results for the six months to 1 July, Bakkavor said reported revenues were up 7.9% and like-for-like revenues up 7.4% in the period.
This growth was led by price with volume broadly flat, it said. Overall volumes reflected a strong recovery in China post-Covid, and while UK volumes were marginally down it said it continued to outperform the market.
UK like-for-like and reported revenue increased by 7.6% to £913.7m, led by pricing as inflationary pressures persisted. Having consistently outperformed the market, which was down 3.3% in H1 2023, the group’s volumes were down only 1% year on year.
US like-for-like revenue was down 4.2% to £111.6m, which reflected good underlying growth, up 11%, but offset by the loss of volume from a single customer as the group re-shapes its business in North America.
In China, trading recovered to pre-Covid levels with LFL revenue of £59.7m up 35.1% against a softer 2022 comparison due to regional lockdowns.
Despite the first half having the challenges of continued supply chain disruption, inflation and weak underlying UK volume, group adjusted operating profit was up 2.1% to £43.4m.
Operating profit was up 12.7% to £46.3m and included the one-off benefit from simplifying its operations in China.
Bakkavor said the execution of its restructuring plans was key to its delivery and that it would continue to support second half performance.
The group faced £91m of cost inflation, which represented a 10% increase on its total cost base. Continued support from customers meant that recovery of inflation through price increases was £79m in the period.
While there have been pockets of deflation, overall prices remain elevated. It expects an increase in costs at the lower end of its previous guidance of 6% to 8% in 2023.
With positive momentum expected to continue, the group anticipates full year adjusted operating profit to be at least in line with prior year of £89.4m, which is £4m ahead of current consensus.
This revised outlook is underpinned by restructuring savings, strong pipeline to support UK share gains albeit volumes remain under pressure, delivery of embedded changes in the US and ongoing volume recovery in China.
“Our continued market share gains in the UK reflects our consistent delivery for customers and demonstrates that our broad product range continues to meet the needs of shoppers during the cost of living crisis,” said CEO Mike Edwards.
“Internationally we have seen good progress too, with operational improvement plans now starting to fuel enhanced profitability in the US. In China, post-Covid volume recovery is underpinning much reduced operating losses.
“We are confident in delivering an upgraded full-year performance, with adjusted operating profit now anticipated to be at least in line with last year and ahead of current market expectations. This is underpinned by the execution of our restructuring, which is driving performance and synergies across the business ahead of our expectations. I am also pleased that we now have momentum building in all three regions, which is positive as we look forward.
“This, coupled with an improved balance sheet, mean the group is in a strong position to capitalise on its opportunities through the remainder of this year and beyond.”
On the markets this morning, the FTSE 100 has sunk 0.9% to 7,371.8pts.
Risers so far today include Bakkavor, up 5% to 104p, Virgin Wines, up 1.9% to 53p and Finsbury Food Group, up 1.6% to 93p.
Fallers include WH Smith, down 4.8% to 1,413p, Just Eat Takeaway.com, down 2.9% to 1,052p and Kerry Group, down 2.1% to €83.26.
Yesterday in the City
The FTSE 100 fell back a further 0.2% yesterday to close the day at 7,437.9pts.
A number of key retail names were amongst the market’s fallers after US investment bank JP Morgan raised concerns over the prospect of grocery pricing deflation.
B&M European Value Retail fell 3.4% to back to 547.8p on the day it bought 51 stores from the collapsed Wilko chain, Tesco fell 2.8% to 256.3p, Ocado was down 2.4% to 857.8p, Marks & Spencer was down 1.4% to 223.8p and Sainsbury’s dropped 1.2% to 265.4p.
Other fallers included Just Eat Takeaway.com, down 3.3% to 1,083p, Greencore, down 1.7% to 79.2p, Nichols, down 1.4% to 1,025p, Coca-Cola Europacific Partners, down 1.3% to €57.75 and Diageo, down 1.1% to 3,147.5p.
Risers included Virgin Wines, up 10.6% to 52p, Cranswick, up 1.4% to 3,358p, Bakkavor, up 1% to 99p and Naked Wines, up 0.9% to 71.1p.
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