'Unacceptable performance' sees WH Smith post big losses

Unacceptable performance, operational shortcomings and tough competition lay the core of a poor year for WH Smith, according to the company's chief executive.

Kate Swann was speaking after WH Smith's interim results, published today, revealed that the retailer's losses before tax were £135 million – a huge turnaround on last year's positive figures which showed a profit of £52 million. The root cause of the massive swing from figures black to red was the exceptional charge of £200 million due to restructuring costs.

Pre-tax profit was in line with market expectations at £67 million – down from last year's mark of £102 million. This also reflected a 2% drop in sales, particularly in books and music.

WH Smith said that £207 million in dividend cash will be returned to shareholders on 29 October

Ms Swann admitted that it had been a "poor year" for the group. The High Street Retail business had delivered an "unacceptable performance following weak Christmas trading" – highlighting operational shortcomings and underlying strategic challenges to the business, she said.

She added: "We have strengthened management, reduced the cost base and taken action to reinstate sound retailing disciplines. While we still face considerable challenges, we have begun to position the High Street Retail business to meet these more effectively."

After the sale of the group's USA Travel Retail, Aspac Retail and Publishing businesses, the business is now "considerably simplified and focused on its core retail and news distribution businesses in the UK", she added.

“Current trading is in line with expectations. Although we are making progress in improving the business, much remains to be done and we expect to face tough competition in our core markets this Christmas,” the WH Smith chief concluded.

(gmcg/mb)