WHSmith posts profit rise despite OP slump



31 October 2006 — London (UK): WHSmith has announced its preliminary results for the fiscal year 2006.


Profit before tax and exceptional items on continuing operations rose 31 percent to £51 million ($97 million) from £39 million a year earlier.


Profits from high street trading operations increased by14 percent to £42 million from £37 million in 2005.


Total group profit before tax was up 42 percent to £44 million from £31m in the previous year.


Basic EPS improved by 50 percent to £0.18.6p from £0.12 in 2005.


Stationery comparative sales fell by 4 percent to £1.3 billion, blamed on lower consumer spending in the market.


The retailer said that it focused on its core categories and removed unprofitable categories, including electronics, which had a negative impact on sales but a positive impact on profit.


Gross margin was up strongly driven by intra category mix and sourcing benefits from low cost countries.


In the second half of the year the company began to test extended ranges of wrap, art and crafts and core stationery in a small number of large stores. It has also been testing scrap-booking, card-making and educational toys. These ranges have now been added to 70 stores.


During the year, WHSmith embarked on a stationery trial store in Barnet. The trial proved successful and the findings are being incorporated into the retailer’s standard stores.


In the second half of the year, three further standalone stationery-only stores were opened in Orpington, Bangor and Tonbridge to gather more data.