Profits up at WH Smith despite high street dip

In the company’s preliminary results for the year ended 31 August 2015, group profit before tax rose to £121m from £112m in 2014.

Its high street trading profit was £59m, up 2% from £58m the year before. This is an increase of 10%.

It said the extra cost of the higher wage bill will represent around 0.5% of its total cost base a year, adding the high street division will mostly take the brunt of the financial impact in the current year.

WHS said like-for-like sales in physical books were down 2% for the year with the second half flat to last year.

Gross margin also improved by 90 basis points. In e-books WHS said market growth of e-book content had slowed as e-book consumption “continues to migrate to apps on tablets rather than dedicated eReading devices”.

“Looking ahead, our focus will remain on profitable growth, cash generation, investing in new opportunities and evolving our customer proposition, all to ensure we are well positioned for the future”.

The retailer said its travel arm, which operates from 736 units, had “delivered a strong performance across all channels” with total sales up 9 per cent and like-for-like sales up 4 per cent.

WH Smith has warned that the introduction of the Government’s new living wage could cost it between £2m and £3m a year, as it unveiled growing profits and sales.

But one of the most interesting tidbits from today’s update is a key line that has been driving growth in its high street division – the emergence of colouring-in books for grown-ups, which was singled out as having made a strong contribution to the stationer’s second half.

WH Smith announced a £50m share buyback and a 13pc increase in its final dividend to 27.3p a share.

Retailer WH Smith hailed the new craze for “colour therapy” sweeping the United Kingdom as it posted a rise in annual profits and cheered surging sales of colouring-in books for grown-ups.