WH Smith sees profit at low end of forecast as Mideast conflict, promotions weigh

WH Smith Cuts Profit Forecast Amid Mideast Conflict and Promotional Pressures

WH Smith Faces Financial Challenges and Strategic Shifts

Profit Forecast and Market Impact

Sept 16 (Reuters) - British retailer WH Smith said on Wednesday it expected annual profit at the lower end of its earlier forecast range, as inflation linked to the Middle East conflict squeezed margins and higher promotional activity weighed in.

Shares fell as much as 4.7% in early trading to 346 pence, their lowest level since March 2009. The stock has lost about 43% of its value so far this year.

Influence of Middle East Conflict and Consumer Behavior

The war has hit travel, and rising prices have made people more selective with their spending, forcing WH Smith to cut its profit forecast twice in two months and raise capital earlier this year.

Operational Adjustments and Market Exits

The company, which sells everything from books to travel accessories and confectionery, is reviewing its North American operations, closing underperforming stores, exiting weaker markets, and increasing promotions to attract customers.

International Market Exits

It said on Wednesday it would exit the Netherlands in 2027. It has already exited Norway and agreed to withdraw from Denmark and Sweden early next year.

Financial Performance Overview

Profit and Sales Figures

WH Smith expects headline pre-tax profit of about £75 million ($101 million) for the year ended August 31, compared with its earlier view of between £75 million and £90 million.

Regional Sales Performance

Its like-for-like sales in North America fell 3% in the fourth quarter, reflecting lower passenger volumes and softer demand, while sales in the UK grew 4%.

Industry Context

Travel-sector peer SSP Group, owner of the Upper Crust chain, has also felt the impact of the Middle East conflict through lower passenger volumes in some regions.

($1 = 0.7418 pounds)

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(Reporting by Ankita Bora in Bengaluru; Editing by Rashmi Aich)