Sales recovery at WH Smith takes a hit from Omicron
Sales recovery at WH Smith’s airport stores and train station is provided by Omicron. taken off course
- WH Smith’s travels saw sales recover to 94% of 2019 levels in November
- The company’s high-street revenues remained relatively constant despite Omicron
- ‘Plan B’ curbs encouraged more home working and less international travel
The emergence of the Omicron variant of the coronavirus at the end of last year put a brake on the improvement of trade at WH Smith’s branches at airports and train stations.
While spending at the retailer’s travel division bounced back to 94 percent of pre-pandemic volumes in November, fell to 83 percent of 2019 levels the following month.
Within the UK travel arm, monthly revenues as a percentage of 2019 levels in airport shops increased by 29 percentage points between September and November, but fell six points to 65 percent in December.
Drop: While spending in WH Smith’s travel division bounced back to 94 percent of pre-pandemic volumes in November, it fell to 83 percent of 2019 levels in December
Retail sales in train stations were less volatile by comparison, but still fell from 74 percent from pre-pandemic levels in October and November to 69 percent in December.
That month saw the UK government impose its ‘Plan B’ restrictions due to the rising incidence of Omicron, encouraging Britons to work from home as much as possible and wear face coverings in many indoor public spaces such as shops and theatres.
But while these barriers had a major impact on WH Smith’s in-store purchases at the airport, high-street high-street revenue remained relatively constant through the last four months of 2021 and the first few weeks of this year.
The group said this was partly due to decent amounts of available inventory and healthy trading at its online businesses, such as personalized card and gift seller FunkyPigeon.com and stationery supplier Cult Pens.
The North American travel industry outperformed the UK, with passenger numbers increasing during the holiday season, with bosses highlighting Las Vegas locations in particular.
Despite difficulties in UK airport locations, the company opened 16 InMotion technology accessory stores in UK aviation hubs, including Heathrow and Gatwick airports, and plans to open 14 more stores by the summer.
Travel issues: Since the start of the pandemic, WH Smith has suffered major financial losses due to the lack of international travel and fewer commuters traveling by train
Two more InMotion bases are set to open at Dublin Airport in the spring, while more are expected to open in North America, where it has won the tender for 60 locations to be traded over the next three years.
Chief executive Carl Cowling said that while the company expects “to be slightly impacted by the Omicron variant, we expect a resumption of the recovery in our travel markets in the coming months.”
He added: ‘We are well positioned for the key trading period in Travel this summer and the ongoing recovery in our markets.’
Since the start of the pandemic, WH Smith has suffered significant financial losses due to the lack of international travel and the rise of working from home, which has reduced commuter travel by train.
In 2020, it posted an annual pre-tax loss of £280 million, even after sales of its main website rose 240 percent. It also closed dozens of stores and cut jobs.
Although trade recovered significantly the following year as restrictions eased and the High Street division turned a profit, it still suffered a loss of £116 million.
WH Smith’s stock took a big plunge when those results were announced, but has since recovered well and was 6.6 percent higher at £16.55 by mid-afternoon Wednesday.
Russ Mold, investment director of AJ Bell, said: “Strategically, the company has remained focused on the longer term, and there are some interesting developments that put WH Smith in a stronger position to thrive once life returns to normal.”
It has secured more shops in travel hubs and is rolling out an initiative to house a pharmacy in travel shops. If Covid can stop interrupting daily life, then WH Smith arguably has a good chance of bouncing back sharply.”