Shares in WH Smith (LON: SMWH) fell sharply in early trading on Wednesday before paring most of the losses, after the travel retailer trimmed its full-year profit guidance in a pre-close update.
The stock opened at 350p, down from Tuesday’s close of 362.8p, and touched an intraday low of 345.6p, a fall of around 4.7%. By the afternoon the shares had recovered most of that ground, trading close to 362.4p, broadly flat on the day, having already lost around 9% over the preceding week amid a run of weak sentiment.
The volatility followed WH Smith’s announcement that headline group profit before tax for the year to 31 August is expected to be about £75m, at the lower end of prior expectations.
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The company said increased promotional activity, reduced brand marketing and inflation had weighed on trading margins, partly offset by lower central costs and reduced interest charges.
Group revenue rose 5% for the year, with fourth-quarter UK revenue up 7% and like-for-like growth of 4%, led by strong performances in its Hospital and Rail channels. North America and Rest of the World divisions were more mixed, with Resorts revenue down 26% in the fourth quarter amid store rationalisation.
Net debt is expected to be around £325m, with leverage near 2.0 times, in line with expectations following June’s £103m equity raise. WH Smith will report full preliminary results on 12 November.
