Despite the short-term impact of Omicron, the market seems prepared to look forward to improving prospects for retailer WH Smith (SMWH) in the wake of its first half update.
Shares in the company, which has a high street operation and outlets in travel hubs, gained 5% as it pointed to an improvement in its travel business in the coming months and forecast better cash generation.
For the 20 weeks to 15 January, revenue was 85% of 2019 levels for the period including 87% for High Street and 83% for travel.
Revenue had actually recovered to 90% of 2019 levels in November but then slipped back due to the impact of Omicron and new government restrictions.
‘Looking ahead, although we are seeing a small impact from the Omicron variant, we anticipate a resumption in the recovery of our travel markets over the coming months,’ chief executive Carl Cowling said.
‘We are well placed for the key trading period in travel this summer and the ongoing recovery in our markets.’
STORE ROLL-OUT PLANS
The company opened 30 new stores in the period with plans to open 99 new travel stores over the next three years.
AJ Bell investment director Russ Mould commented: ‘Strategically the company has remained focused on the longer term and there are some interesting developments that put WH Smith in a stronger place to thrive once life returns to normal.
‘It has secured more stores in travel hubs, and it is rolling out an initiative whereby it houses a pharmacy within travel shops. If Covid can stop interrupting everyday life, then WH Smith arguably stands a good chance of bouncing back sharply.’
The group will announce its first half results in full on 27 April 2020.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Tom Sieber) and the editor (Ian Conway) own shares in AJ Bell.
