This article first appeared on GuruFocus .
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Total Group Revenue:Increased by 5% to 748 million.
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Headline Profit Before Tax:3 million.
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Headline EBITDA:48 million.
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Headline Net Debt:496 million.
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Dividend:Suspended to focus on debt reduction.
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Like-for-Like Revenue Growth:2% overall; UK 2%, North America 1%, Rest of the World 6%.
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North America Total Revenue Growth:10% on a constant currency basis.
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UK Headline Trading Profit:34 million.
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North America Headline Trading Profit:2 million.
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Rest of the World Headline Trading Loss:4 million.
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Capital Expenditure:50 million invested in new stores and development.
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Store Openings and Closures:36 new stores opened, 41 stores closed, net closure of 5 stores.
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Full Year Revenue Growth Forecast:3% to 5% total group revenue.
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Full Year Net Debt Forecast:Expected to be around 420 million.
Release Date: April 23, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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WH Smith PLC ( WHTPF ) reported a 5% increase in total group revenue to 748 million, with like-for-like revenue growth across all divisions.
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The company has renewed about 85% of its airport concessions in the UK, providing a clear runway for future operations.
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WH Smith PLC ( WHTPF ) has introduced a successful one-stop shop concept at Heathrow Terminal 5, which is expected to drive future growth.
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The company's travel essentials business in North America has shown strong performance, growing 22% on a constant currency basis.
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WH Smith PLC ( WHTPF ) has a strong brand presence and a business model that benefits from high foot traffic in airports, providing a valuable service to travelers.
Negative Points
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The company is facing inflationary pressures and expected disruptions from the UK store development program, impacting headline profit before tax.
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WH Smith PLC ( WHTPF ) has suspended its dividend to focus on debt reduction, indicating financial strain.
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The company is dealing with accounting issues in North America, which have required significant management attention.
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Passenger numbers and consumer confidence are adversely affected by the conflict in the Middle East, impacting business performance.
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WH Smith PLC ( WHTPF ) is experiencing increased logistics costs in North America due to rising oil prices and initial setup costs for a new distribution center.
Q & A Highlights
Q: On average transaction value in UK air, is it trading down within categories or are people not choosing to buy anything in a category? Also, how is promotional activity playing out? A: Max Izzard, Group CFO, explained that the average transaction value is affected by the mix of passengers due to fewer long-haul flights, impacting the types of products purchased, such as neck pillows. Promotional activity is crucial to offer value, which can impact margins. In North America, there is still potential for margin enhancement by transferring skills from the UK.
Q: Can you expand on the UK renewal program costs and the resorts business strategy? Also, what are the expected non-underlying cash costs for the full year? A: Leo Quinn, Executive Chairman, noted increased competition in the UK market affecting returns. Max Izzard added that the resorts business, particularly fashion, is under review due to declining profitability. Non-underlying cash costs are expected to be between 10 and 15 million in the second half.
Q: Regarding UK margins, is there potential to return to previous levels? What are the opportunities in the rest of the world? A: Leo Quinn mentioned that margins are always under pressure, but there are opportunities to optimize costs. Max Izzard highlighted ongoing efforts to scale down operations in certain markets and explore franchise models, with progress in locations like Dusseldorf and Norway.
Q: What is the target net debt to EBITDA level for the fiscal year-end? Can you provide more details on the InMotion performance and Albuquerque store strategy? A: Max Izzard aims for net debt to EBITDA to be around two times by year-end. InMotion has shown positive signs with a 3% increase in the first seven weeks of trading. The Albuquerque store's flexible category mix is part of a strategy to adapt to changing customer needs.
Q: What are the key drivers for cash generation, and how will you manage CapEx and working capital? A: Max Izzard emphasized cost control and working capital management, particularly in North America. CapEx will be focused on high-return opportunities, with a target of $90 million this year and $80 million in subsequent years. Non-underlying costs are expected to decrease as certain programs conclude.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
