WH Smith warns on profit, launches capital raise as Iran war hits sales
WH Smith's Financial Performance and Strategic Response
June 10 (Reuters) - British travel retailer WH Smith cut its annual profit forecast for the second time in two months on Wednesday and launched an equity raise to bolster its finances as the Iran war disrupts global travel and hurts passenger spending.
Impact of Global Events on WH Smith
Airlines have been cutting capacity on weaker demand and inflation-wary consumers are reining in spending elsewhere. WH Smith, which sells everything from books to travel accessories and confectionery across airports and train stations, had already suspended its dividend and warned on profits in April.
Declining Passenger Numbers and Consumer Demand
The retailer said that its expectations for the full financial year reflect observed and anticipated declines in passenger numbers as well as weakening consumer demand across all divisions. It assumes no near-term improvement in consumer confidence and that jet fuel supplies can be maintained.
Capital Raise and Financial Measures
The company said it would issue up to 26 million new shares, representing about 20% of its existing share capital, through a non-pre-emptive placing to institutional investors, a retail offer and subscriptions by directors.
Performance in Key Markets
Like-for-like revenue in its key North America air division fell 2% in the last seven weeks as airlines hiked prices and cut capacity, hurting footfall and spend per passenger.
Impairment Charges and Store Closures
It also expects to take up to £150 million in non-cash impairment charges related to goodwill and store closures, particularly in its North American operations where it is shuttering underperforming stores.
Profit Forecast and Outlook
The company expects to report headline profit before tax and non-underlying items of £75 million to £90 million ($100.45 million to $120.54 million), below its previous forecast of £90 million to £105 million for the year ending August 31, 2026.
Exchange Rate Information
($1 = 0.7467 pounds)
Reporting Credits
(Reporting by Simone Lobo and Raechel Thankam Job in Bengaluru; Editing by Ronojoy Mazumdar, Elaine Hardcastle)
