Covid-19 could knock £130m from sales, says WH Smith

WH Smith expects that full-year results will see an ‘adverse impact’ from the effects of coronavirus, with up to £130m being wiped from its revenue. 

In its latest update, the stationary group predicted an impact between £100m and £130m on group revenue, while underlying profit before tax can expect a loss of £40m.

In its second-half results, it predicts UK Travel revenue to be down approximately 15% on expectations. Airport revenue, its “most affected” channel, is expected to be down 35% in March and April.  

Second half revenue in the US is expected to be approximately 20% lower than its expectations, with International business also expected to be 20% lower.

The group said it had been monitoring the financial impact of Covid-19 since the outbreak began across both its travel and high street businesses. 

It has already noted a “significant impact” in its Asia Pacific business, which accounts for 5% of WH Smith travel revenue.

It also confirmed that there has been a “material reduction” in passenger numbers at airports in the UK, the US and Europe.

In its latest statement, it said: “The group is managing the business to protect profitability and is taking all necessary action to reduce costs. 

“Based on current trading and modelling, the group believes that the effects of Covid-19 will result in a reduction in our expectations for revenue and profit across the Travel business for the second half.”  

It added: “Today, the company is therefore providing guidance on the impact on full year results of Covid-19 based on an assumption of a challenging third quarter and a modest normalisation in the fourth quarter.

“WH Smith is a resilient business with a strong balance sheet, substantial cash liquidity and strong cashflow. Over the longer term, the board remains confident in the strategy and believes the group is well positioned to benefit from the normalisation and growth of the global travel market.”

The group will provide a further update on its “fast evolving” position at its interim results on 22 April.