Profits year to date substantially improved year on year
WH Smith PLC is today providing an update on its Christmas trading performance for the 6 weeks to 15 January 2005 and for the 20 weeks to 15 January 2005.
The Group's profitability for the year to date has improved substantially compared to the prior year. This result has been driven by a material improvement in profitability in High Street Retail as a result of a significant increase in gross margin and tight cost control, together with strong performances from Travel Retail and News Distribution.
Total Retail like for like (LFL) sales were down 1% for the 6 weeks and down 2% for the 20 weeks. This sales performance reflects our planned focus on margin improvement, in particular not chasing unprofitable sales, and the difficult trading environment.
Retail
LFL sales in High Street Retail were down 2% for the 6 weeks and down 3% for the 20 weeks. However, gross margin improvement in excess of 200 basis points has been greater than anticipated and cost savings have been delivered faster than planned. Consequently, High Street Retail profitability is substantially ahead of the prior year.
Gross margin improvements in the High Street business were driven by a number of factors. These include the planned reduction in unprofitable promotions and focus on profitable sales, an encouraging performance from new stationery initiatives (which have positively influenced the business's mix) and improved buying terms. In addition, p roduct availability was ahead of target, and significantly improved compared to last year, stock levels and markdowns were tightly controlled and seasonal stock has sold through well.
By category, our Retail LFL sales and margins were as follows: Book sales for the 20 weeks were below the prior year as we avoided last year's unprofitable promotions, but this was compensated for by the consequent gains in gross margin. Core stationery saw strong LFL sales and gross margin improvement while News & Impulse delivered steady LFL sales and a good improvement in gross margin. Entertainment, where we have reduced our exposure, continued to be difficult from a sales perspective, as key DVD titles underperformed market expectations, but gross margins held steady.
In Travel Retail a stronger than expected 4% LFL sales growth for the 6 and 20 weeks periods reflects a particularly strong performance in airports. The sales growth has also been accompanied by an improvement in gross margin.
News Distribution
In the 20 weeks to 15 January 2005, LFL sales for WHSmith News were up 2% as the benefits of improved customer focus continue to deliver a strong financial and operational performance.
Commenting on the Group's performance, Kate Swann, Group Chief Executive said:
"Progress against our plan to deliver value to shareholders is encouraging. Customer response to increased product choice, better availability and improved store standards has been positive. This is a long-term recovery programme and much remains to be done; however, we are on track and confident in the outcome for the year."
Note: All references to profitability in this statement refer to operating profit before exceptional items of the continuing businesses.
Enquiries to -Notes to Editors:
WHSmith's best selling titles by volume over the Christmas period were as follows:
Books - Non-Fiction
Jamie Oliver - Jamie's Dinners
Sheila Hancock - The Two of Us: My Life with John Thaw
Michael Palin - Himalaya
Chris Heath - Robbie Williams: Feel
Trinny Woodall & Susannah Constantine - What You Wear Can Change Your Life
Books - Fiction
Dan Brown - The Da Vinci Code
Martina Cole - The Graft
Helen Fielding - Bridget Jones, Edge of Reason
Andy McNab - Deep Black
Patricia Cornwell - Trace
DVD
Harry Potter and the Prisoner of Askaban
I, Robot
Little Britain: Series One
Spiderman 2
Lord of the Rings: Return of the King
Music
Robbie Williams - Greatest Hits
U2 - How to dismantle an atomic bomb
Il Divo - Il Divo
Scissor Sisters - Scissor Sisters
Kylie Minogue - Ultimate Kylie
Magazines
OK!
Delia's Complete Christmas
Radio Times Christmas
Only Fools and Horses Collection
1966 World Cup