WH Smith is to close six shops following a “detailed review” of the business.
Instead of previous plans to revitalise its high street arm, the group “wind down” operations and focus more on travel outlets in airports and railway stations.
“We had a good year in High Street despite the well documented challenges of the UK high street. During an encouraging second half, the business traded well and we quickly identified the latest trend in the market, becoming a one-stop-shop for all slime related products,” said the WH Smith chief executive Stephen Clarke.
“Despite this good performance, we are not ignoring the broader challenges on the UK high street and, during the second half, we conducted a business review to ensure our High Street business is fit for purpose now and for the future.”
“While there is some uncertainty in the economic environment, we are pleased with the start to the new year in both businesses, and will continue to focus on profitable growth, cash generation and new opportunities to profitably invest for the future. We are well positioned for the current year and beyond,” he added.
High street losses led to a 3% decrease year-on-year, whilst the group’s revenue increased by 2% overall to £1.26 billion.
Group profit before tax jumped 7% from £96 million to £103 million in 2017 whilst total profit fell 4%.
Travel now represents 63% of the group’s trading profit and the group hopes to continue investing in this arm.
Fidelity Personal Investment associate director, Ed Monk, said: “Among struggling traditional retail names, WH Smith has stood apart.”
“Preliminary numbers today confirm again its change of direction from a business driven by large High Street stores to one driven by small outlets in airports and train stations.”
“Improving trading hasn’t been reflected in the shares in the past year, which have trended lower since a peak at the turn of the year. Whether shares look cheap or expensive – trading at 19 times earnings ahead of the results – depends on how you view the company. It’s expensive versus the High Street retail sector but is cheaper than other pure travel retailers, which it increasingly sees itself as,” he added.
Shares in WH Smith (LON: SMWH) are trading down 11.41% at 1.802,00 (1424GMT).