Retailer WH Smith revealed sales at its high street estate remain under pressure just days after the group confirmed talks to sell the 500-strong chain.
The firm said total high street sales dropped 6% in the 21 weeks to January 25, covering the key Christmas season, down 3% on a like-for-like basis.
The news comes just days after the company confirmed discussions about potentially selling off its high street stores to concentrate on its larger travel operation.
Despite the decline in high street sales, which was in line with expectations, the company’s travel shops located in airports, railway stations and hospitals performed exceptionally well, with like-for-like sales increasing by 6% over the five-month period.
This contributed to an overall 3% rise in same-store revenues. WH Smith stated that its high street division ended the Christmas trading season with “a clean stock position, and we are on track to deliver our targeted full-year cost savings of £11million”.
Carl Cowling, group chief executive of WH Smith, said: “The group has had a good start to the financial year and we continue to see strong momentum across our core travel business.”
He added: “The group is in a strong position, and while there is some economic uncertainty, we are confident of another year of good growth in 2025.”
However, the results reveal the challenges faced by the high street, which has seen a decline in trading over recent years. The group has responded by reducing costs and closing unprofitable shops.
The recent Budget announcements have added to its troubles, with an expected increase of £20million in its wage bill.
Earlier this month, WH Smith announced plans to close 17 of its high street stores by 2025, following the closure of 14 in the last financial year.
The high street business now contributes only about 15% of the annual group trading profit, as the travel division has surpassed it due to WH Smith’s expansion into North America and globally.
Private equity firms are reportedly among those interested in the high street division, creating uncertainty for approximately 5,000 employees across the stores.
It is believed that Hilco and Alteri have expressed interest in a potential takeover of the business following WH Smith’s initiation of the process late last year.
Both Hilco and Bensons for Beds owner Alteri have experience in UK retail as turnaround specialists, causing concern among some staff about what a private equity takeover deal could mean for the future of the WH Smith high street estate and workforce.
Hobbycraft owner Modella Capital has also been reported to have held discussions with WH Smith and its advisers. Reports suggest Canadian billionaire Doug Putman, owner of music retail chain HMV, is another potential bidder.
