WH Smith Eyes Sale of Historic High Street Business to Focus on Travel Unit
In a significant shift, British retailer WH Smith is exploring the sale of its iconic high street business to concentrate on its thriving travel store unit. This move marks the latest blow to the UK’s struggling retail industry.
A Shift in Focus
The 232-year-old retailer, part of the FTSE 250, has been expanding its UK travel unit aggressively, with over 580 travel stores across airports, hospitals, railway stations, and motorway service areas. Its global travel business now spans 1,200 stores across 32 countries, accounting for three-quarters of its group revenue and 85% of its trading profit.
Analysts Weigh In
According to Investec’s Kate Calvert, the plans are “not a surprise” given the group’s investment in its travel operations. Calvert believes that WH Smith investors should be encouraged by the move, as disposing of the high street business could lead to a higher valuation rating over time.
High Street Woes
The UK high street retail industry is facing unprecedented pressure, with the rise of e-commerce and domestic policy changes adding to costs for businesses. The government’s recent increases to the minimum hourly wage and National Insurance payroll tax have further exacerbated the issue.
Industry Impact
The move comes as major retailers warn of potential job cuts to cover the cost of higher taxes. Sainsbury’s, a high street supermarket chain, has announced plans to cut 3,000 jobs in the UK. The British Retail Consortium has cautioned that retailers may be forced to close unprofitable stores to stay afloat.
A Challenging Environment
“The Retail sector has seen unprecedented operational expenditure inflation in recent years from National Minimum wage and rates increases,” Calvert noted. “Government increases in NMW & NI are a huge headwind and very unhelpful. Retailers will need to close unprofitable stores.”
What’s Next?
WH Smith’s shares climbed around 5.5% following the announcement, having fallen nearly 11% in 2024. As the retailer navigates this significant shift, investors will be watching closely to see how the sale of its high street business will impact its future growth and profitability.
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