WH Smith, a well-known retailer, is facing a decline in sales as it announces plans to shut down 17 of its shops and lay off 500 employees. The company has already closed 14 branches, with the additional 17 closures looming. This decision comes amidst talks of a potential sale of its high street units, which encompass over 500 stores across the UK. The firm reported a 6% drop in total high street sales during the 21-week period ending on January 25, with a 3% decline on a like-for-like basis, during the crucial Christmas season. Despite the challenges in its high street arm, WH Smith highlighted the success of its travel shops located in airports, railway stations, and hospitals, which saw a 6% increase in like-for-like sales. As a result, overall revenues grew by 3% on a same-store basis, indicating a shift towards a stronger performance in its travel business.
Carl Cowling, the group chief executive of WH Smith, expressed optimism about the company’s future despite economic uncertainties, stating confidence in achieving another year of growth in 2025. However, the struggles faced by the high street segment have been evident in recent years, leading to cost-cutting measures and the closure of unprofitable stores. The high street business now contributes only around 15% to the annual group trading profit, with the travel division surpassing it as WH Smith expands globally. The decision to close more high street shops highlights the ongoing challenges in this sector, with approximately 5,000 employees across the stores now facing uncertain futures. Private equity firms such as Hilco and Alteri have shown interest in potentially acquiring the high street division, raising concerns among staff about the implications of such a takeover on the workforce and estate of WH Smith.
The potential sale of WH Smith’s high street stores reflects a broader trend in the retail industry, where traditional brick-and-mortar businesses are facing increasing competition from online retailers. The impact of the COVID-19 pandemic has accelerated the shift towards e-commerce, leading many retailers to reassess their physical store portfolios. WH Smith’s strategic decision to focus on its travel business, which has shown strong performance, indicates a recognition of changing consumer behaviours and preferences. The closure of high street shops and the consolidation of operations align with efforts to streamline the business and enhance overall efficiency.
As WH Smith navigates these challenges and explores new opportunities, the company remains committed to delivering value to its shareholders and customers. The transformation of its retail portfolio underscores the evolving landscape of the high street sector, with traditional retailers seeking innovative solutions to adapt to changing market dynamics. The retail industry as a whole continues to undergo significant transformations, with companies like WH Smith at the forefront of reshaping their business models to stay competitive in a rapidly evolving marketplace.