NEIL SAUNDERS | VERDICT
It’s the familiar story of an increase in profits on the back of a decline in overall sales, brought about by cost reductions and margin enhancements. The danger is that as cost savings become more difficult to extract, the business will have a weaker consumer proposition and will continue to see sales slide; ultimately this could damage profitability. We are not yet at that point, but on current form this looks to be the inevitable direction that the firm is heading in.
KEITH BOWMAN | HARGREAVES LANSDOWN
The group’s reputation for consistent if somewhat unexciting growth has again been enhanced. An early adoption of the now increasingly fashionable trend to concentrate on profit margins at the expense of sales has served the company well. Furthermore, despite understandably cautious comments with regards to the outlook, management is still attempting to push the boundaries. In all, WH Smith continues to be rewarded with a positive (‘buy’) market consensus.
NICK BUBB | ARDEN
The figures for the first-half numbers are in line, as always, and there is not too much in the statement to get excited about. But the 18 per cent rise in the interim dividend is a useful reminder that WH Smith continues to grind out massive surplus cash flow (for dividend growth and earnings per share enhancing share buybacks) and a five per cent yield is very attractive. There is overseas growth across the board with store openings in hospitals and stations as well as in India.