WH Smith Q1 2025 earnings preview: travel retail transformation takes centre stage
WH Smith is set to release its Q1 trading update on 4 June, marking its first quarter as a pure-play travel retailer following the sale of its high street operations.
WH Smith's strategic transformation and recent performance
As WH Smith prepares to release its first quarter (Q1) 2025 trading update on 4 June, investors are closely watching the company's performance following its strategic pivot away from the UK high street and towards its expanding travel retail operations.
In the 21 weeks leading up to 25 January, 2025, WH Smith reported a 4% increase in total group revenue on a constant currency basis compared to the previous year. This growth was primarily driven by the company's travel divisions, demonstrating the effectiveness of its strategic focus.
The completion of the high street business sale in March 2025 marks a watershed moment for WH Smith, transforming it from a traditional UK retailer into a focused travel retail specialist. This strategic pivot represents one of the most significant corporate transformations in recent UK retail history.
CEO Carl Cowling noted, "The Group has had a good start to the financial year, and we continue to see strong momentum across our core travel business." This momentum has been evident across all geographical segments of the travel operations, suggesting broad-based strength in the company's core markets.
Travel retail divisions driving robust growth
UK Travel revenue rose by 7%, bolstered by the rollout of new product ranges in food, health, and beauty. This performance demonstrates WH Smith's ability to adapt its offering to changing consumer preferences and capitalise on the recovery in travel volumes post-pandemic.
North America revenue increased by 6%, with like-for-like sales up 3%. The Travel Essentials segment, the largest and fastest-growing part of WH Smith's American division, saw total revenue on a constant currency basis up 20% and up 7% on a like-for-like basis.
Rest of the World revenue climbed 16% on a constant currency basis, with like-for-like growth of 9%. This impressive performance across international markets highlights the global appeal of WH Smith's travel retail concept and its ability to expand successfully beyond its traditional UK base.
The strength across all travel divisions suggests that WH Smith's strategic focus is paying dividends, with the company well-positioned to benefit from the continued recovery in global travel patterns and changing consumer behaviours in airport and station environments.
High street divestment completed
In March 2025, WH Smith completed the sale of its UK high street business, comprising 482 stores, to Modella Capital for £76 million. The stores are expected to be rebranded as "TGJones," marking the end of WH Smith's presence on the UK high street.
This divestment allows WH Smith to focus entirely on its more profitable travel retail operations, which now account for the majority of the company's revenue. The decision to exit the high street reflects the challenging dynamics facing traditional retail locations, with declining footfall and increasing online competition.
The £76 million proceeds from the sale provide WH Smith with additional financial flexibility to invest in its travel retail expansion and enhance shareholder returns. This capital can be deployed toward new store openings, digital initiatives, and potential acquisitions within the travel retail sector.
The timing of the disposal, coinciding with the start of Q1 2025, means the upcoming trading update will be the first to reflect WH Smith as a pure-play travel retailer, providing a clearer picture of the underlying performance of this focused business model.
Financial performance and profitability trends
For the six months ending 28 February, 2025, WH Smith reported group revenue of £951 million. The travel division generated £63 million in profit, with £40 million from the UK and £18 million from North America, while the high street division contributed £15 million, down from £22 million in the same period the previous year.
The company reported a diluted loss per share of 33.6p, compared to earnings per share of 13p in the first half (H1) of the 2024 financial year (FY24). This loss primarily reflects one-off costs associated with the strategic transformation, including restructuring expenses and provisions related to the high street disposal.
The profitability split between divisions clearly illustrates why the strategic pivot made sense. Travel operations generated significantly higher margins than the declining high street business, validating management's decision to focus resources on the more profitable growth areas.
Looking ahead, investors will be keen to see how the removal of high street losses and the increased focus on travel retail translate into improved overall profitability. The Q1 trading update should provide early insights into this financial transformation.
Capital allocation and shareholder returns
As part of its capital allocation strategy, WH Smith announced a £50 million share buyback program in September 2024. By 28 January, 2025, the company had repurchased 1.4 million shares for a total consideration of £17.5 million.
This share buyback programme demonstrates management's confidence in the company's prospects and commitment to returning value to shareholders. With the high street disposal now complete, the company has additional flexibility for capital allocation, potentially accelerating the pace of share repurchases.
The combination of strategic focus and capital discipline suggests that WH Smith is well-positioned to deliver enhanced returns to shareholders. The proceeds from the high street sale, combined with improved cash generation from the focused travel business, provide multiple options for value creation.
Dividend policy will also be an area of interest for investors, particularly given the transformation in the business model. The company's ability to grow dividends from its more focused, higher-margin operations will be a key measure of the strategic pivot's success.
Growth opportunities and market expansion
The travel retail market continues to offer significant growth opportunities, driven by the recovery in international travel and changing consumer behaviours. WH Smith's established positions in key transport hubs provide a strong foundation for capitalising on these trends.
International expansion remains a key growth driver, with the strong performance in Rest of the World markets demonstrating the scalability of the WH Smith travel retail concept. New market entries and expansion of existing operations could provide substantial growth potential over the medium term.
Product innovation and range expansion have been important drivers of like-for-like growth, with the success of new food, health, and beauty ranges in the UK demonstrating the company's ability to evolve its offering. Further product development could unlock additional growth from existing locations.
Digital initiatives and technology investments are increasingly important in the travel retail environment. WH Smith's progress in areas such as click-and-collect services, mobile ordering, and personalised marketing will be key factors in maintaining competitive advantage and driving future growth.
WH Smith analyst rating and technical analysis
According to LSEG Data & Analytics, 1 analyst has a ‘strong buy’ recommendation for WH Smith, 8 a ‘buy’ and 3 a ‘hold’ with a long-term mean price target at 1,311.82p, 24% above the current share price (as of 29/05/2025).
WH Smith LSEG Data & Analytics chart
WH Smith has a TipRanks Smart Score of ‘8 Outperform’ and is rated as a ‘buy’ with 5 ’buy’ and 3 ‘hold’ recommendations (as of 29/05/2025).
WH Smith TipRanks Smart Score chart
The WH Smith share price, down around 10% year-to-date, is expected to end the month of May in positive territory after three straight monthly losses taking it to its 872.5p April low. This low was made between its August-to-October 2020 lows at 909.5p-to-876.5p from where it has been recovering towards the October 2022-to-May 2024 lows at 1,069p-to-1,177p which act as resistance.
WH Smith monthly candlestick chart
The 10 and 28 March highs at 1,106p-to-1,110p need to be exceeded on a daily chart closing basis for a medium-term bullish reversal to manifest itself. In this case the 200-day simple moving average (SMA) at 1,196p would represent the next technical upside target ahead of the late January peak at 1,315p.
While last week’s low at 1,008p and the 55-day SMA at 996.1p underpin, the short-term uptrend remains intact.
WH Smith daily candlestick chart
How to trade WH Smith shares ahead of the update
For investors considering positions in WH Smith ahead of the Q1 trading update, the company's transformation story presents both opportunities and considerations.
- Research WH Smith's travel retail strategy, market positioning, and growth prospects to understand the investment opportunity.
- Consider how the company's pure-play travel retail focus might affect its valuation and growth profile compared to traditional retailers.
- Open an account with IG by visiting our website and completing the application process.
- Search for 'WH Smith' or its ticker 'SMWH' on our trading platform or app.
- Place your trade with appropriate risk management, considering potential volatility around earnings announcements and the company's ongoing transformation.
Spread betting and CFD trading offer flexible ways to take positions on WH Smith, allowing you to potentially profit from both rising and falling prices. These products can be particularly useful for trading around corporate transformations where share price volatility may be elevated.
For those with a longer-term view who believe in WH Smith's travel retail transformation, share dealing provides a straightforward way to build a position in what is now a focused travel retail specialist rather than a traditional high street retailer.
Without the high street division, WH Smith remains optimistic about its future, focusing on expanding its travel retail operations and enhancing shareholder value through strategic initiatives. The upcoming Q1 2025 trading update on 4 June will provide further insights into the company's performance and strategic direction.
The transformation of WH Smith from a traditional high street retailer into a pure-play travel retail specialist represents a bold strategic pivot that could unlock significant value for shareholders. With travel volumes continuing to recover and the company's focused approach showing strong momentum across all regions, the Q1 results could mark an important milestone in this transformation story.
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