WH Smith has raised £102 million through a share sale as it grapples with a significant profit warning. The retailer, which operates numerous stores in US airports, has seen a decline in shopper numbers due to the ongoing war in the Middle East. This downturn has led to a forecasted pre-tax profit of £75 million to £90 million, down from previous estimates of £90 million to £105 million.
The impact of reduced passenger traffic is being felt not only in the US but also in the UK, where airport store revenues have stagnated. In response, WH Smith plans to close unprofitable locations and shift towards a franchise model in certain markets. This strategy aims to strengthen its balance sheet and address the challenges posed by inflation and changing consumer behaviour.
Additionally, the company is still recovering from an accounting scandal that previously overstated profits, resulting in a significant loss of market value. The Financial Reporting Council is currently investigating the auditing practices of PwC related to WH Smith’s financial statements.
As WH Smith embarks on this ‘self-help’ programme, the future remains uncertain. The combination of external economic pressures and internal restructuring efforts will test investor confidence and the company’s ability to adapt in a challenging retail environment.
Source: The Guardian
