Books, magazines and stationery retailer WH Smith (SMWH) rebounded 10.5p to trade at £10.21 on Monday after the company secured new lending facilities of £120m to see it through the coronavirus crisis, which are conditional on it raising a slug of fresh cash.

Responding to recent press speculation surrounding a possible equity issue, WH Smith confirmed it is in an ‘advanced stage of preparation’ to place new shares equivalent to a maximum 13.7% of its issued share capital.


Since issuing a profit warning on 12 March, WH Smith along with many other businesses has seen a ‘substantial downturn in economic activity’ resulting from the COVID-19 pandemic.

‘The duration of the Covid-19 related crisis is uncertain and, as a result, the group has secured new lending facilities of £120m, which will strengthen its balance sheet, working capital and liquidity position,’ assured the retailer in today’s short statement.

These facilities, plus incoming placing proceeds and actions to manage the cost base and cash flow, will provide ‘sufficient liquidity to deal with this most challenging of trading environments’, insisted WH Smith.


Russ Mould, investment director at AJ Bell, explained WH Smith’s business has been ‘hit hard by a significant drop in customers visiting its shops due to lockdown measures.

‘Raising extra cash is becoming increasing popular with companies as way to shore up their balance sheets and given them a better chance of navigating through the crisis. It’s unfortunate that existing shareholders will be diluted by such fundraising, but that’s the price to pay to ensure the business can survive.’


Last month, the newspapers-to-snacks seller warned Covid-19’s effects would crimp second half sales and profit in the travel business, which has been WH Smith’s growth engine.

The coronavirus outbreak is proving particularly damaging for WH Smith, which over the past decade or more, has successfully pivoted away from the struggling UK high street to drive all of its sales and earnings growth from airports and train stations. These travel hubs have effectively been turned into ghost towns amid the global lockdown.


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Issue Date: 06 Apr 2020