WH Smith puts a positive spin on falling sales

Things aren't looking great for the high street retailer. But CEO Kate Swann is adamant things will improve.

by Emma Haslett
Last Updated: 21 Jan 2015
Troubled retailer WH Smith can at least say it’s bang on-trend: the company has followed a precedent set by several other high-street retailers, by revealing that sales were down 4% in the 18 weeks to July 2 compared with a year earlier. High street sales were down 4%, while its travel division (the shops in airports, railway stations, service stations, etc) also performed badly, with like-for-like sales falling by 2%. All in all, then, not a terribly encouraging performance. Although the company is trying to put a brave face on things…

So brave, in fact, that CEO Kate Swann insisted that despite its travails, the company will press ahead with its plan to open new stores over the next few months. She added that, while the economic environment still looks decidedly dodgy at the moment, she continued to ‘remain confident in the outcome for the full year’. Analysts seem to agree; because WH Smith has been able to expand its margins, chances are that it’ll still make the profit it predicted at the beginning of the year.

That’s obviously good news for Swann, not least because she came under fire last year for her £4m bonus. The CEO, who was drafted in to undertake a ‘wholesale turnaround’ of the company, got this tidy sum because she was able to increase margins – notably by ditching WH Smith’s entertainment arm in favour of its more traditional books, newspapers, magazines and stationery, just as the likes of Zavvi and Woolworths were going under. And although she still hasn’t convinced everyone that her plan will bear fruit in the long term, this should keep the naysayers at bay for the time being.

To be fair to WH Smith, it’s by no means the only company having a tough time at the moment – even behemoths like Samsung are experiencing a squeeze. The electronics manufacturer (by sales, the world’s largest technology company) says its estimated operating profit for April-June dropped by more than a quarter, compared with a year earlier. Apparently, it’s to do with waning enthusiasm for flat-screen TVs – although, judging by the number of Galaxy smartphones it’s shifting at the moment, this is more of a temporary blip than a permanent thing. We’ve no doubt it’ll find a way to make up for it. 4DTV, anyone?
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Finance Retail

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