£280 million loss for W H Smith, but USA expansion is brighter spot
The high street and airport retail stalwart, Swindon-headquartered W H Smith, has reported a £280 million loss.
The retailer, which has released its preliminary results for the year ended August 31, 2020, said that it had been a challenging year, but trends were improving prior to the current lockdown and there are encouraging signs of recovery in North America, where it continues to open new stores and win business.
The Group generated a headline loss before tax of £69 million (2019: headline profit before tax £155 million) and, after non-underlying items and IFRS 16, statutory loss before tax of £280 million (2019: profit before tax £135 million). During the second half, the Group received a total of £22 million in government furlough and similar schemes in other countries. The Group also benefited from the UK's Business Rates holiday, which was worth £20m in the year.
Carl Cowling, Group Chief Executive, said: "The Group delivered a strong first half performance and traded strongly prior to the outbreak of Covid-19. Since March, we have been heavily impacted by the pandemic. Despite the many challenges faced, we responded quickly and took decisive actions to protect our colleagues, customers and the business, including strengthening our financial position.
"While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85% of passengers are domestic, is beginning to see some encouraging signs of recovery. In addition, we continue to open new stores in the US and win significant tenders across major US airports.
"In High Street, we had seen a steady recovery and we were well set up both in stores and online as we went into the second lockdown. We currently have 558 stores open.
"We have a robust plan across all our businesses focusing on cost management and initiatives within our control which support us in the immediate term and position us well to emerge stronger as our markets recover.
"I have nothing but enormous admiration for all our colleagues across the business, be it in stores, our distribution centres or our head offices. Their support and commitment has been outstanding during this difficult period and I would like to thank every one of them for how they have responded.
"We are a resilient and agile business. The actions we have taken have put us in a strong position to navigate this time of uncertainty and we are well positioned to benefit as our markets return to growth."
Throughout the first lockdown period, and in line with government guidance, W M Smith kept open 203 high street stores which host Post Offices and around 130 travel stores located within hospitals across the UK to serve NHS frontline workers.
Following the announcement of a second lockdown in England, it has 558 stores open on the high street and 243 stores open in ravel, including 206 post offices and 135 hospital stores.
The company said: “We were able to apply the learnings from the first lockdown to act fast where necessary to return stock, furlough staff and manage our supply chain. We also took measures to make sure our stores can open swiftly as lockdown eases.”
The retailers is repositioning itself for the future. Its strategies include boosting average transaction value, extending product ranges, cutting costs, investing in developing strategically important projects such as a new store at London Heathrow Airport Terminal 2 and Bowery Bay at La Guardia Airport, New York, and widening the product range available on its website and building customer engagement through social media.
