WH Smith scraps dividend as it crashes to £280m loss
WH Smith has scrapped its dividend for the full year as the pandemic drove it to a pre-tax loss of £280m.
The figures
WH Smith posted revenue of £1bn in the year to the end of August, down 33 per cent on last year.
The company swung to a pre-tax loss of £280m, compared to a profit of £135m in 2019.
Basic loss per share was 199.2p, compared to 98.1p.
Net debt stood at £301m, up from £180m last year.
Why it’s interesting
The figures come at the end of a torrid year for WH Smith, as coronavirus-related closures and reduced footfall battered sales.
The newsagent chain was forced to shutter the majority of its stores during the first lockdown, barring 203 high street stores that host Post Offices and roughly 130 travel stores in hospitals.
Following the announcement of the second lockdown in England, the company now has 558 high street stores open and 243 operating in travel.
WH Smith’s core market in the UK was severely impacted over the year as lower passenger numbers hit sales at its travel sites. Total revenue in the year was £344m, down 39 per cent on 2019.
The pandemic also hit WH Smith’s operations in North America, where it has expanded in the airport market through its £305m takeover of Marshall Retail Group last year.
But it said passenger numbers had picked up more quickly and it expected a faster recovery in this region than in the rest of the world.
The firm said trading on the high street had been more resilient, though like-for-like revenue still fell 19 per cent, with a full-year trading loss of £10m.
WH Smith took a number of measures to reduce costs during the crisis, including cutting staff numbers and renegotiating rents with landlords.
In April it bolstered its balance sheet by raising £160m through a share placing and agreeing a £120m 12-month credit facility.
However, the company said it will not pay a dividend for the financial year.
WH Smith said it would burn through roughly £20m in cash in November. However, the chain said it was now in a stronger position than forecast in August and had a plan in place to weather the latest lockdown measures.
What WH Smith said
“Since March, we have been heavily impacted by the pandemic,” said chief executive Carl Cowling.
“While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85 per cent of passengers are domestic, is beginning to see some encouraging signs of recovery.
“We have a robust plan across all our businesses focusing on cost management and initiatives within our control which support us in the immediate term and position us well to emerge stronger as our markets recover.”