WH Smith half-year profits fall

High Street chain WH Smith has revealed a drop in its half-year profits by more than a third to £63 million.

While trading had been good over the last six months, in the United States the effects of 11 September had cost the company £27 million.

The economic slowdown following the attacks also led to a collapse in sales in the company's US travel unit, which accounts for 10 per cent of its turnover.

Like-for-like sales at the outlets also fell 18 per cent, as the unit recorded losses of £6 million, following a £12 million profit last year.

Commenting on the results, Richard Handover, Group Chief Executive said: "Underlying trading in our businesses has been satisfactory, with the exception of the US business.

"UK Retail continues to perform robustly with good performances in the books, entertainment and news and express categories. The continuing emphasis on product differentiation, internal efficiencies and organic space growth is delivering tangible results.

"News Distribution has also had a much stronger six months, driven primarily by increased newspaper prices. In addition, we are now seeing the benefits of the SAP investment, with significant reductions in waste levels.

"Trading in the US Travel Retail business continues to be difficult following the September 11th terrorist attacks, although sales trends are gradually improving. The value of this business has clearly been significantly impacted by these events and we have made appropriate adjustments to the carrying value of assets to reflect this.

"Given the solid year to date performances from all of our UK businesses and the more encouraging trends from the US business, we are confident about our future prospects."

Since 11 September, WH Smith has closed 19 of its 393 hotel outlets. However, its 180 airport branches have fared better in recent weeks, with travel starting to pick up again and rents having been renegotiated with airport operators. (MB)