WHSmith to raise £325m for travel business

WHSmith is set to raise £325m as part of plans to capitalise on travel returning to 2019 levels.

The FSTE 250 listed retailer reported revenue of £1.02 billion and net losses of £239 million across its 1,700 locations during the 2020 financial year and currently derives more than half its revenue from its travel focused outlets.

WHSmith said it expects sales to recover to 2019 levels within the next two to three years.

The retailer intends to open 100 new shops, using £50 million of the capital, in locations such as airports, hospitals, and train stations, where it has already won some new tenders.

Most of the stores - 68 – are set to open in the US, with the remaining stores set to open across the UK, Australia, and mainland Europe.

The retailer also said it saw “encouraging signs of growth” in the US aviation market, where lockdown regulations don’t prevent international travel.
Part of the new funds raised will be used to service £400 million of existing bonds that are due for redemption in 2023.

The company confirmed it intends to return to its pre-pandemic policy of returning surplus cash as dividends to shareholders.

WHSmith is not the only major UK retailer to raise capital for expansion despite the pandemic. In February JD Sports raised £464 million to fuel its planned international growth.

“In travel, while many of our stores have remained closed, it is a credit to the team that we have kept up the momentum, focusing on our plan to increase average transaction value and spend per passenger while continuing to win new business,” said WHSmith group chief executive Carl Cowling. “As a result, we are now operationally stronger than prior to the pandemic.”

“We’ve just spent a lot of time negotiating our way out of minimum annual guarantees. Our rents will grow in line with our sales.

He added: “Our average transaction value is a lot less and a lot of what we sell is not rated for VAT anyway.”

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