WH Smith reveals retail problems
WH Smith’s share price took a dive today after the company issued a profit warning ahead of the release of its full-year results in October.
The company noted that its retail business would “deliver results below market expectations”.
At its worst the value of the stock fell by 11%, although WH Smith shares closed at 344p – a fall of just under 7%.
The country’s leading stationer and bookseller predicted that like-for-like sales in the high street business would be flat in the second half of the year due to competition, particularly in the entertainment goods, and the recent hot weather, which has reduced footfall.
The company also noted that the impact of the Iraq war and SARS on airport passenger numbers did not bode well for its UK travel retail business.
Analysts have noted that sales of products such as CDs make up around a fifth of the group’s UK sales, and are likely to have been hit by price cuts from supermarkets and other general retailers.
“We had a double whammy of much lower sales, particularly in music, and margins being under huge pressure as the market goes into massive discounting,” chief executive Richard Handover told Reuters.
The company’s other businesses, including its publishing division have not been affected, however.
The British Retail Consortium’s monthly sales monitor revealed that the record temperatures last month have had a mixed effect on the retail sector.
Director general Bill Moyes noted that July had been “a reasonable month”.
“Some retailers have benefited from the warm weather, but in some parts of the industry customers have stayed away, sunbathing rather than shopping,” he noted.
But the BRC claims that the entertainment sector has had a decent summer because of big summer album sales, and the release of the new Harry Potter novel.
