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WH Smith is to close 25 high street stores, affecting nearly 200 jobs, after the coronavirus pandemic pushed the retailer £280m into the red.
The books to paperclips chain said it was likely to permanently close the stores, which are mainly smaller ones, as sales in its high street business fell 19%. Its previously successful travel outlets – in stations, airports and hospitals – recorded a 43% slide in sales in the year to 31 August. In contrast, the retailer’s main website increased sales by more than 240%.
The company, which operates more than 1,000 UK stores and a further 500-plus overseas, said: “While this is not an easy decision to make for our colleagues or the communities we serve, it is vital we retain a strong and cash generative high street portfolio going forward.”
The group will renegotiate leases on 120 stores this year and said it would be looking at a further 300 up for renewal over the next three years. It achieved average rent cuts of 45% on leases renewed in the past year, adding: “We only renew a lease where we are confident of delivering economic value over the life of that lease.”
WH Smith also cancelled its final dividend, worth £47m last year, as it said it expected to burn through £20m of cash in November alone during the UK’s high street lockdown to prevent the spread of Covid-19.
The latest job cuts come on top of 1,500 jobs losses announced by WH Smith in August – about 15% of the company’s 14,000-strong global workforce – in shops located in railway stations and airports.
WH Smith said it had spent £21m on restructuring and redundancy costs during the year and a further £4m on exiting France and a joint venture in Brazil as a result of the pandemic.
Those one-off costs helped push it to the £280m annual loss from a profit of more than £100m last year despite receiving £22m from the UK government’s job retention scheme and similar schemes in other countries and £20m during the UK’s business rates holiday.
Carl Cowling, the chief executive of WH Smith, said: “The group delivered a strong first-half performance and traded strongly prior to the outbreak of Covid-19. Since March, we have been heavily impacted by the pandemic.”
He added that, while passenger numbers continued to be significantly down in the UK, WH Smith’s North American businesses where 85% of air passengers were domestic, was “beginning to see some encouraging signs of recovery”. He said the group was continuing to open new stores in US airports but admitted that sales at UK travel stores were only likely to recover to 60% of pre-covid levels by August next year when high street sales would still be 14% down.
Cowling said WH Smith had a “robust plan” focused on cost management and had enough cash in place to survive even if there were a further two-month lockdown in the UK.
“We are a resilient and agile business. The actions we have taken have put us in a strong position to navigate this time of uncertainty and we are well positioned to benefit as our markets return to growth,” he said.
Source: The Guardian
Keyword: WH Smith to shut 25 high street stores after it reports £280m loss | Business