WHSmith records large pre-tax loss amid Covid-19 crisis

WHSmith has reported a pre-tax loss of £226 million in the year ended 31 August 2020. This compares to a profit of £135 million during the same period last year, with the business severely impacted by the Covid-19 pandemic.

The group’s overall revenue dropped 33% year-on-year in the 12 months, including a fall of 43% in its travel business.

The stationery, books, and general merchandise retailer also outlined plans to adapt to a more digitally focused model in light of changing customer behaviours during the pandemic.

It noted that its eCommerce channels had ensured its online businesses had performed strongly over this period. This included record sales over key trading events and profit growth for its online personalised greetings card business, www.funkypidgeon.com, sales growth of over 240% on its new website www.whsmith.co.uk in the second half of the year, and continued strong performance of its specialist pen website, www.cultpens.com. However, its online division still only generates a small proportion of its overall revenue.

As part of this new business model, in August, WHSmith announced a major restructuring of its UK store operations, including cutting up to 1,500 jobs.

Carl Cowling, group chief executive at WHSmith commented: “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 the 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.”