WH Smith raises dividend as profit jumps after cuts

WH SMITH yesterday hiked its dividend by 18 per cent after reporting a profit rise.

The stationer said first-half profits in the six months to 28 February rose three per cent to £64m on like-for-like sales that were down four per cent at £686m.

Sales at stores open at least a year fell five per cent, with a three per cent decline at its travel division exacerbated by a six per cent drop at high street shops.

Gross profit margins, however, were up 170 basis points, following a long-term trend in which the group has steered away from low margin products like CDs and DVDs, focused on better sourcing and better control of markdowns.

The results met City forecasts, and the company said it now planned to grow with international expansion.

WH Smith already has 24 international outlets, including stores in Australia, India and Kuwait, and is aiming to expand these to 40 this year.

The average spend in one of its travel outlets at airports, stations and hospitals is just £3.50 while in the company’s high street stores it is £5.50.

The dividend rise represents a lift to 7.2p per share.

Chief executive Kate Swann added yesterday: “In Travel we have grown profit by nine per cent, demonstrating the strength of the business model. Our high street business continues to be highly profitable and cash generative.”

WH Smith’s shares surged after the figures were announced, closing 5.4 per cent higher at 475.1p.