WH Smith: customers complain but shareholders rejoice
WH Smith Group offers impeccable investment credentials, consistently generating high returns on equity and plenty of cash, which it has used to reward shareholders, either through a rising dividend or via share buybacks. But can the good times continue for shareholders in this much maligned retailer?
With its origins in the 1790s, WH Smith (LON: SMWH) has changed considerably over the past 200 years, with success today linked to the travel sector, rather than the UK high street. The £2bn business of today operates through 2 distinct divisions travel and high street, with the former referring to concessions in transport hubs such as railway stations, airports and, more recently, hospitals. As of 28 February 2019 the company operated over 1,600 stores, primarily in the UK, comprising 1,004 travel outlets and 599 high street stores.
Of the 1,004 travel units, 151 are in airports, 122 in railway stations, 125 in motorway service areas (most of which are franchise units), 133 in hospitals (including 20 M&S Simply Food stores) and 42 in locations such as bus stations, workplaces and Funky Pigeon stores. The business has expanded by winning new tenders and retaining existing space and by building critical mass in emerging hubs.
While the high street business has attracted all the bad press, this has largely been used…
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