WH Smith bets on travel to ease its high street woes

WH Smith posted another fall in sales yesterday, but the magazine and stationery retailer said the pace of declines had eased. It added that its profit margins had improved as a result of cost-cutting.

The group expressed confidence in its full-year results as it posted a 1 per cent decline in total sales for the first 18 weeks of its second half, to 2 July. Like-for-like sales were down 4 per cent against a year ago, an improvement on the 21 weeks to 22 January, when they were down by 5 per cent.

Yesterday's update also showed that sales at the company's travel stores at airports and stations were up by 2 per cent, with the like-for-like figure down by a similar amount. The high street business saw a 3 per cent decline in sales, with the like-for-like figure down by 4 per cent in the 18 months to the beginning of July.

The performances marked an improvement from the retailer's last update. Recent months had seen further "gross margin expansion", the company said, adding that at its new store-opening programme was continuing to make progress. It also said that its cost savings were on target.

But WH Smith was careful to acknowledge the tough retail backdrop, saying: "The economic environment remains uncertain and while we continue to be cautious about consumer spending, we remain confident in the outcome for the full year."

The message was welcomed in the City, with Panmure Gordon's analyst Philip Dorgan saying that WH Smith's shares deserved to trade at a "substantial premium to the sector". The positive assessment was echoed by Kate Calvert at Seymour Pierce, who highlighted the company's "strong management team", led by its chief executive, Kate Swann.