* Full-year pretax profit 108 million, up 6 percent
* Sales 1.19 billion pounds, down 5 percent
* Gross margin up 180 basis points
* Plans for further 50 million pound share buyback
(Recasts, adds CEO, analyst comment, shares)
LONDON, Oct 10 British books, newspaper and
stationery retailer WH Smith plans to open up to 40
stores a year in overseas markets as far-flung as Azerbaijan and
Fiji as it seeks a new profit stream to add to its mature UK
high street business.
The 221-year-old group said on Thursday its travel division,
made up of outlets at airports, railway stations, motorway
service stations, hospitals and workplaces, had secured
contracts for 20 new units - including six in Australia, four in
Ireland, four in the Middle East and two in Russia.
WH Smith now has 141 shops outside the UK, either open or
soon to open. Its travel business has 673 outlets.
"The world's a big place and in the long term the potential
is very big," chief executive Steve Clarke, who took over in
July, told reporters.
He was speaking after the firm posted a 6 percent rise in
annual profit, slightly ahead of expectations; raised its
dividend 14 percent; and said it planned another 50 million
pound ($80 million) share buyback to go with one carried out
Shares in WH Smith, up 27 percent over the last year, were
up 5 percent at 876.50 pence at 1020 GMT.
Data and surveys indicate that the outlook is improving for
UK consumer spending, which generates about two-thirds of gross
domestic product, but retailers remain wary as inflation
continues to outpace wage rises.
WH Smith made a pretax profit of 108 million pounds in the
year to Aug. 31, beating analysts' consensus forecast of 107
million as well as its 2011-12 result of 102 million.
IMPROVING MARGINS, CUTTING COSTS
The outcome was driven by a strategy that focuses on
improving profit margins and reducing costs rather than
expanding underlying sales.
Total sales fell 5 percent to 1.19 billion pounds, with
sales at stores open more than a year also down 5 percent.
However, the firm said its gross margin improved 180 basis
points due to better buying and a more profitable product mix.
The travel division posted a 5 percent rise in trading
profit to 66 million pounds, while the firm's traditional high
street business made 56 million pounds, up 4 percent.
Clarke said that, while WH Smith's 615-store high street
business was "a low-growth story" in terms of sales, it was
still an attractive cash generator. He expected sales in the
travel business to begin growing again when the number of
passengers setting off from UK airports returned to
The firm ended the period with net cash of 31 million
pounds, down from 36 million, and is paying a dividend of 30.7
Including the additional share buyback and the proposed
dividend, the firm will have returned 536 million pounds of cash
to shareholders since 2007 - about half of its current market
Analysts at Conlumino said that, while WH Smith's financial
management continues to be "razor-like", they had concerns at
the neglect of the high street store estate, saying that in
parts it was "just plain tatty and has about as much aesthetic
appeal as a 1970s job centre".
($1 = 0.6277 British pounds)
(Reporting by James Davey; Editing by Kevin Liffey)