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WH Smith raises dividend as international expansion takes flight

WH Smith has raised its half-year dividend despite posting stagnant profits that were propped up by its international expansion. 
The FTSE 250 retailer raised its interim dividend by 10pc to 16p per share, demonstrating that it is “confident” about the remainder of the year.
Pre-profit for the six months to February 2018 slipped 1pc to ?82m, with the stationer's shops in train stations and airports continuing to outperform its lacklustre high street arm.
Profits on the high street slid 6pc to ?50m for the period, while rising 5pc in its travel division to ?41m.
The company is embarking on a bullish international expansion. It has a presence in 48 airports and 27 countries outside the UK with 68 units open in Europe, 95 in the Middle East and India and 95 in the Asia-Pacific region.
WH Smith is opening 26 new units in travel locations outside of the UK, including eight units at Madrid Airport. It also plans to open seven stores in Rio de Janeiro Galeao Airport - its first ever shops in South America. The retailer is also opening more sites in Australia, India, Malaysia and Alicante.
Chief executive Stephen Clarke said that, despite the slight decline in group profit, it was still the third highest total in the last 15 years. WH Smith has kept profits healthy by cutting costs where possible. In the last two years its high-street stores have also been lifted by sales of parody books and the adult colouring craze, though both trends have now petered out.
WH Smith raises dividend as international expansion takes flight

Stephen Clarke, chief executive of WH Smith, does not believe it needs to close stores on the high street

Credit:
Geoff Pugh
“Given what’s going on in the UK high street, for that to be our third best profit number in 15 years, I think is a good demonstration that the strategy that we’ve had in place for the last 15 years, which we haven’t changed, is especially fit for purpose for today’s trading environment,” said Mr Clarke.
While revenue declined 5pc in the retailer’s 610 high street stores, Mr Clarke said he did not see any need to close outlets.
Stationery was a particularly strong area in the high street stores, with revenue up 3pc in the category compared with the prior year. WH Smith has signed a deal with the Post Office to stock its stationery exclusively in 175 directly managed post offices for five years. WH Smith already has 168 post offices open within its high street stores.
WH Smith shares
George Salmon of Hargreaves Lansdown said that the attractive feature of the travel business "is the customer is either in such a rush that convenience takes priority over price, or in the case of airports, there aren’t many alternatives where a sandwich, magazine or book can be bought."
Eleanor Parr of GlobalData noted: “With many other struggling players closing stores it is surprising that WH Smith has not significantly culled its store portfolio – it only closed one store net over the six months. The retailer must consider shutting less profitable stores so it can continue to focus investment on its far more promising travel business.”
Shares in the company were up 1.36pc this morning at ?20.06.
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