Newsagent WH Smith (SMWH.L) has announced plans to close another 25 shops after slumping to a £280m loss.
WH Smith on Thursday said it expected to not renew the leases on 25 High Street stores across the country over the coming year as part of efforts to cut costs. The retailer operates over 500 shops across the UK and closed eight stores last year.
“While this is not an easy decision to make for our colleagues or the communities we serve, it is vital we retain a strong and cash generative high street portfolio going forward,” the company said.
WH Smith began a review of its store estate in August after suffering a large drop in sales due to the COVID-19 pandemic. The retailer said at the time it would cut around 1,500 jobs, equivalent to just over 10% of its workforce.
News of the likely store closures came as WH Smith said it had endured a “challenging” year. The company fell to a pre-tax loss of £280m ($366m) in the 12 months to the end of August, compared with £135m profit a year earlier. The business took a £21m charge linked to the redundancies and restructuring announced in August.
“Since March, we have been heavily impacted by the pandemic,” WH Smith chief executive Carl Cowling said in a statement.
Revenue across the company fell 27% to £1bn. Sales were down 32% at its travel business and revenue in this division was down 90% in April at the height of the pandemic’s first wave.
“This captive market where shoppers made impulse purchases as they waited for trains and planes, or scanned a grab and go sandwich on their daily commute, all but evaporated during the pandemic,” said Susannah Streeter, a senior investment and markets analyst at stockbroker Hargreaves Lansdown.
Despite the collapse in its travel business, Cowling said there were signs of life for this division in the US.
“While passenger numbers continue to be significantly impacted in the UK, our North American business, where 85% of passengers are domestic, is beginning to see some encouraging signs of recovery,” he said.
Cowling said WH Smith was continuing to open new stores across the US despite problems elsewhere.
WATCH: WH Smith to slash up to 1,500 jobs
WH Smith said the second lockdown in England — its core market — would inevitably have a negative effect on business. The company estimates it will burn through £20m in cash during November.
“We have a robust plan across all our businesses focusing on cost management and initiatives within our control which support us in the immediate term and position us well to emerge stronger as our markets recover,” Cowling said.
Despite slumping to a loss, shares in WH Smith rose 1.7% in early trade.
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