WH Smith launches £50m share buyback after strong summer

WH Smith is to give investors a £50m windfall as holidaymakers snapping up travel essentials helped boost summer sales at the retail chain.

The retailer said it would launch a £50m share buyback – a move that could increase its share price – in a reflection of the strong cashflow in the business, a healthy balance sheet and after receiving £85m from the buyout of its pension fund. Its shares jumped more than 12% on the announcement.

Comparable group sales excluding new stores rose 5% in the year to the end of August, with global travel store sales up 7% on a year earlier.

Its UK travel business saw Comparable annual store sales in its UK travel business rose by 10%, while revenues from high street shops shrank by 2%. Total annual group revenues rose by 7%.

The 230-year-old chain, which has 1,100 stores across the UK, sells books and magazines as well as food and drinks. It has been closing high street storeswhile pushing into travel hubs such as railway stations, motorway services and airports.

The company, which has a presence in more than 30 countries, said that strong passenger numbers and its strategy of providing a one-stop shop for travel essentials – including everything from luggage locks to walking guides – had boosted sales.

It said it had also benefited from broadening its ranges in food and drinks, health and beauty, and technology. Earlier this year, the company launched its first own-label food-to-go range including sandwiches and burrito boxes – Smith’s Family Kitchen – which it said was performing ahead of expectations. There was 10% growth in total revenues in the company’s global travel business.

The overall growth in sales marks a change in fortunes for the retailer, which lost two-thirds of its stock market value during the coronavirus pandemic and had to cut 1,500 jobs.

Its cash position was further strengthened by the completion of the company’s buyout of its defined pension benefit scheme.

WH Smith Pension Trust agreed a £1bn full scheme buy-in with Standard Life in 2022, insuring the liabilities of just under 12,950 members.

The completion of the process has resulted in the company receiving a £75m cash refund, as well as the transfer of a £10m investment fund, which will convert to cash over the next two years.

The company, which is valued at £1.8bn, said it hopes to return more surplus cash to investors in future.

Carl Cowling, the chief executive, said: “We have ended the financial year in a strong position, delivering a performance in line with our expectations with good growth across our travel businesses. Our UK division performed particularly well over the peak summer trading period.”