Prelims ahead of full-year report show sales up 3% and operating profit up 7%
Companies: WH Smith PLC
Highstreet retailer WH Smith has announced strong preliminary results this morning, ahead of its full-year report in November, reporting growth in LFL sales, revenue, PBT and EPS.
The group's sales were up 3% at £1.2bn, with LFL sales up 1%. Its operating profit increased 7% to £149m, with headline PBT up 7% to £132m.
The company's Travel division saw strong performance across all channels with total sales up 10% and LFL sales up 4% year-on-year, reflecting the impact of its key initiatives and improved passenger numbers:
"Trading profit increased by 9% to £87m which includes £7m (2015: £5m) from our growing International channel. We continue to invest in the business and opened 18 new units in the UK during the year, taking us to a total of 576 units in the UK. We won a further 32 units in our international channel, making a total of 232 units, of which 192 are open. As at 31 August 2016 Travel operated from 768 units."
Whilst its better known High Street operation also delivered strong performance, with trading profit up 5% to £62m:
"We saw a good gross margin performance and costs were tightly controlled. We were able to accelerate some of our efficiency initiatives in the second half and delivered £6m of cost savings, £2m ahead of plan. In total, cost savings in the year were £11m. An additional £10m of cost savings have been identified over the next three years making a total of £19m of which £10m are planned for 2016/17. As at 31 August 2016 High Street operated from 612 units."
In terms of financials, the company's diluted EPS increased by 10% to 93.9p, giving a 6% earnings yield, which as the company points out, reflects the profit increase and fewer basic weighted average shares in issue.
WH Smith is highly cash generative and has a strong balance sheet, with net funds of £7m and a free cash flow of £108m.
The company announced a final dividend of 30.5p per share, 12% increase on last year, brining the total dividend to 43.9p (2.8% yield).
CEO Stephen Clarke said the company had achieved profitable growth, strong cash generation and was investing in new opportunities. Despite economic uncertainty, the group assures investors it is well positioned for the current year and beyond:
"We have delivered a good performance across the Group with earnings up 10%.
"Our Travel business continues to perform well with strong sales across all channels and profit up 9%. We have further extended our food to go ranges and during the year we sold over ten million 'meal deals'. Internationally, we have won a further 32 stores in the year, giving us a total of 232 stores won across 25 countries."
Mr Clarke said the group continued to deliver "sustainable growth":
"In the High Street business, our profit focused strategy continues to deliver sustainable growth with profit up 5%. Stationery sales have been strong in the year and in Books we are delighted with the success of the Zoella Book Club which launched during the summer.
"The Board has proposed a 12% increase in the final dividend and we have today announced a further share buyback of up to £50m reflecting the Group's strong cash flow and our positive outlook for the future."