WH Smith to buy back more shares as profits rise
LONDON (Reuters) - British books and stationery retailer WH Smith beat forecasts with a 6 percent rise in year profit, driven by a strategy that focuses on improving profit margins and reducing costs rather than growing underlying sales.
The 221-year-old group, also said on Thursday it would buy back another 50 million pounds of shares, having completed a programme of the same amount announced last August.
It also increased targeted cost savings in its high street business to 22 million pounds over the next three years.
Data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of gross domestic product, but retailers remain wary as inflation continues to outpace wage rises.
"Looking to the year ahead, we continue to plan cautiously in an uncertain environment, however we are a resilient business and are well positioned for continued growth in both the UK and internationally," said chief executive Steve Clarke, who succeeded Kate Swann in July.
WH Smith, which trades from over 1,200 stores, made a pre-tax profit of 108 million pounds in the year to August 31.
That compares to analysts' consensus forecast of 107 million pounds and 102 million pounds made in the 2011-12 year.
Total sales fell 5 percent to 1.19 billion pounds, with sales at stores open over a year also down 5 percent.
However, the firm's gross margin improved 180 basis points due to better buying and a sales mix of more profitable products.
WH Smith's travel division - outlets at airports, railway stations, motorway service stations, hospitals and work places - posted a 5 percent rise in trading profit to 66 million pounds, while the firm's traditional high street business made 56 million pounds, up 4 percent.
The firm ended the period with net cash of 31 million pounds and raised its dividend payout by 14 percent to 30.7 pence.
Shares in WH Smith, up 27 percent over the last year, closed Wednesday at 835 pence, valuing the business at 1.04 billion pounds.
(Reporting by James Davey; editing by Rhys Jones)
