WH Smith bullish on outlook for the full-year despite a decline in sales

WH Smith yesterday gave an upbeat view for the rest of the year despite reporting a drop in sales.

Group sales fell two per cent in the ten weeks to 6 November.

The firm said sales at stores open over a year were down one per cent at its travel division and down four per cent in its high street business.

The company said: “We remain a resilient business and are well positioned for continued growth in the future.”

Chief executive Kate Swann’s strategy is based on cutting costs and improving gross margins by focusing on more profitable products, better sourcing and better control of markdowns, rather than driving top-line sales.

She has rebalanced WH Smith’s mix of products towards core categories and away from entertainment products -- CDs, DVDs, computer games and consoles.

Last month the retailer beat forecasts with a nine per cent rise in 2009-10 profit, lifted its final dividend by 18 per cent and said it would return up to another £50m to shareholders through a buyback programme.

Shares in the company have risen ten per cent in the last three months.

The company has 570 high street stores and a 500-outlet travel division with units at airports, train stations, hospitals, motorway service stations.

Numis Securities analyst Andrew Wade said WH Smith continued to do the right things, although he warned the outlook for next year remained tough in an uncertain consumer environment.