WH Smith Shares Fall Post FY24 Results

Shares of WH Smith (LON:SMWH) dropped on Thursday after releasing its FY24 results, which indicated continued investments in its Funky Pigeon online greetings card business. This investment is impacting the performance of its high street division.

At 4:35 am (0935 GMT), WH Smith was trading 4.8% lower at £1,238.

While WH Smith's Travel business reported strong results with sales and EBIT meeting or slightly exceeding expectations, the high street segment faces ongoing challenges that are dampening investor sentiment.

Analysts at Barclays (LON:BARC) noted, "We make small adjustments to our forecasts overall, with FY25 PBT up 1.5% to £175.2m (previously £172.6m), and raise FY26 PBT by 1.1% to £185.1m (previously £183.1m)."

The investment in Funky Pigeon, aimed at enhancing WH Smith's digital presence amidst increasing online competition, has led to higher costs, which are anticipated to continue in the coming year. This sustained expenditure indicates short-term pressures on high street profitability, somewhat tempering the positive growth narrative in the Travel segment.

RBC Capital Markets emphasized that WH Smith's Travel division is well-positioned with a robust pipeline for new store openings, especially in North America. However, they cautioned that any benefits from these expansions might be negated by a weak performance in the high street sector.

Barclays added, "For FY25, reflecting H2 24 trends, we've upgraded our UK Travel EBIT forecast by £4.6m, while lowering our North America EBIT by about £1m, as well as reducing our UK High Street EBIT by approximately £1m."