WH Smith raises guidance and buys a number of Dixons stores

WH Smith sales are recovering as Covid-19 restrictions ease

WH Smith (LON:SMWH) announced on Thursday that its sales are recovering as Covid-19 restrictions ease, causing the firm to raise its guidance for the full-year.

Another reasons for its improved outlook is its acquisition of of a number of former Dixons stores.

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WH Smith bought 17 Dixons stores at sites, including major UK airports, which the company expects will deliver sales at around £60m per year.

The group’s total revenue came to 62% of 2019 levels in the 18 weeks to July 3.

“In Europe, where travel restrictions have been eased in recent weeks, we are seeing a gradual improvement as passenger numbers begin to recover,” the company said. “Outside of North America and Europe, our international business is seeing broadly similar trends to UK air, with passenger numbers significantly down versus 2019.”

“Dixons pulling out of the airport retail market has left WH Smith with an opportunity to increase its market share of selling overpriced adapters for foreign electrical sockets and headphones to replace the ones you left down the back of the sofa when packing to go on holiday,” said Russ Mould, investment director at AJ Bell.

“We all know these types of products can be bought cheaper online but there will always be a market for that last-minute purchase at the airport.”

“WH Smith’s contract win to open new stores in various UK airports is not only a chance to swoop in the gap left by Dixons’ departure but also a chance to roll out its InMotion brand which it acquired in 2018 when it bought North America’s largest airport-based electronics retailer.”

Domestic and business travel is picking up in the US, which might explain why WH Smith says it expects to raise its earnings expectations for the full year thanks to a stronger showing from its North American operations.

The WH Smith share price is down by 1.61% on Thursday to 1,623p.

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