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1. Company Snapshot

1.a. Company Description

WH Smith PLC operates as a retailer in the United Kingdom and internationally.It operates in two segments, Travel and High Street.The Travel segment offers news, books, and convenience for travelling customers.


As of August 31, 2021, it operated 1, 166 units primarily in airports, hospitals, railway stations, motorway service areas, and workplaces.The High Street segment sells stationery products, including greetings cards, general stationery, art and craft, and gifting products; news and impulse products, such as newspapers, magazines, confectionery, and drinks; and books.It operated 544 stores.


This segment also offers its stationery, books, magazines, and gifts through whsmith.co.uk; personalized greetings cards and gifts through funkypigeon.com; pens through cultpens.com; and personalized stationery products through treeofhearts.co.uk and dottyaboutpaper.co.uk websites.The company was founded in 1792 and is based in Swindon, the United Kingdom.

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1.b. Last Insights on SMWH

WH Smith PLC's recent performance was negatively driven by an earnings per share (EPS) miss in its Full Year 2024 results, despite a 7.0% revenue increase to UK£1.92b. The company's expansion plans, including targeting 500 stores in North America by 2028, may be overshadowed by the current challenging market environment, as highlighted by weak trade data from China. Additionally, the company's decision to sell vinyl records in 80 high street shops may not be enough to offset the broader market headwinds.

1.c. Company Highlights

2. WH Smith's Strategic Reset Yields Mixed Results

WH Smith reported a 5% increase in total group revenue to £1.6 billion for the year ended August 31, 2025, with like-for-like revenue growth across all divisions. However, headline trading profit decreased 6% to £159 million, and headline profit before tax was £108 million. The actual EPS came out at 0.4642, slightly beating estimates of 0.4636. The company's headline EBITDA was £187 million, and the Board proposed a final dividend of 6p per share, making the full-year dividend 17.3p per share.

Publication Date: Jan -07

📋 Highlights
  • Strategic Reset Completed: Transitioned to pure-play travel retailer by disposing of non-travel businesses and exiting unprofitable North American stores.
  • Revenue Growth with Profit Decline: Total revenue rose 5% to £1.6 billion, but headline trading profit fell 6% to £159 million, with EBITDA at £187 million.
  • North America Profit Recovery: Division reported £15 million profit in FY25 (6.5% margin) and aims to rebuild to 7-8% margin in 2026 through Travel Essentials focus.
  • Store Optimization Strategy: Net store growth of 28 in FY25 (78 opened, 50 closed), with 50-60 closures and openings planned in FY26 to prioritize quality over quantity.
  • UK Division Strong Performance: Revenue up 5% to £834 million, trading profit increased 7% to £130 million, with a £90M capital program for airport terminal expansion.

Segment Performance

The North America division reported a headline trading profit of £15 million, impacted by a net reduction in supplier income and costs related to inventory management. The U.K. division had a good year, with revenue up 5% to £834 million and headline trading profit up 7% to £130 million. The Rest of the World division is expected to grow and build scale in core markets, particularly in Australia, Ireland, and Spain.

Outlook and Guidance

The company expects total revenue growth in the region of 6% to 8% in the year ahead, driven largely by space, and profitability growth, with headline trading margin expected to grow from 4% in full year '25 to around 7% or 8% in full year '26. The U.K. trading profit margin is anticipated to be 14-15%, North America 7-8%, and the Rest of the World around 5%.

Valuation and Returns

With a P/E Ratio of -5.57 and an EV/EBITDA of 9.04, the market seems to be pricing in a challenging near-term outlook for WH Smith. The company's ROE is -62.07%, and ROIC is -141.05%, indicating significant challenges in generating returns on equity and invested capital. However, the Dividend Yield is 4.45%, which may be attractive to income-focused investors.

Operational Focus

WH Smith is focusing on improving space quality to optimize profits, closing as many stores as it opens in the short term. The company is also prioritizing business opportunities based on returns and ensuring group hurdles are met for each store. In North America, the company will focus on improving and investing in the core Travel Essentials business and reviewing the existing store portfolio.

Margin Potential

The company expects to improve margins in North America, with a medium-term margin potential of 7-8%, driven by mix shift towards Travel Essentials and away from InMotion and Resorts. The Rest of the World division is expected to improve EBIT margins and deliver stronger returns, with a long-term margin potential above 5%.

3. NewsRoom

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FTSE 100 Live: Global stocks find support, Lloyds thrown Curve ball over deal

Nov -19

Source: proactiveinvestors.com

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FTSE 100 Live: Blue-chips search for direction as inflation eases, Lloyds buys digital wallet

Nov -19

Source: proactiveinvestors.com

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How Recent Events Are Rewriting the Story for WH Smith

Nov -08

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WH Smith postpones annual results amid probe into US accounting error

Oct -29

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How Recent Developments Are Rewriting the Story for WH Smith

Oct -24

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Modella Capital acquires majority of Claire’s UK stores, saving 1,000 jobs

Sep -30

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Almost 1,000 Claire’s jobs at risk despite rescue deal

Sep -29

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How Recent Profit Concerns Are Changing the WH Smith Investment Story

Sep -22

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.48%)

6. Segments

Travel

Expected Growth: 7%

WH Smith PLC's 7% travel segment growth is driven by increasing passenger traffic, higher average transaction values, and strategic store locations in high-traffic areas. Additionally, the company's focus on convenience, travel essentials, and partnerships with travel operators contribute to its growth momentum.

High Street

Expected Growth: 5%

High Street segment of WH Smith PLC is driven by strategic store refurbishments, effective cost management, and a strong stationery market. Additionally, the company's focus on convenience and travel locations, as well as its growing online presence, contribute to its 5% growth rate.

7. Detailed Products

Stationery

A wide range of stationery products including pens, pencils, notebooks, and more

Books

A vast selection of fiction and non-fiction books for adults and children

News and Magazines

A wide range of newspapers and magazines covering news, entertainment, and lifestyle

Travel Accessories

A variety of travel-related products including luggage tags, travel wallets, and more

Gifts and Impulse

A selection of gifts, souvenirs, and impulse buys including toys, games, and more

In-Store Services

A range of services including photo printing, lottery tickets, and more

8. WH Smith PLC's Porter Forces

Forces Ranking

Threat Of Substitutes

WH Smith PLC faces moderate threat from substitutes, as customers can opt for digital alternatives such as e-books and online news sources. However, the company's strong brand presence and diversified product offerings mitigate this threat to some extent.

Bargaining Power Of Customers

WH Smith PLC's customers have relatively low bargaining power, as they are individual consumers with limited ability to negotiate prices. The company's large customer base and diversified product offerings also reduce customer bargaining power.

Bargaining Power Of Suppliers

WH Smith PLC's suppliers, including publishers and distributors, have moderate bargaining power. While the company relies on these suppliers for its products, it also has some negotiating power due to its large scale and diversified product offerings.

Threat Of New Entrants

The threat of new entrants is low for WH Smith PLC, as the company has a strong brand presence and established relationships with suppliers. Additionally, the company's diversified product offerings and large scale make it difficult for new entrants to compete.

Intensity Of Rivalry

The intensity of rivalry in the retail industry is high, with WH Smith PLC facing competition from other retailers, online platforms, and supermarkets. The company must continually innovate and adapt to changing consumer preferences to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 66.14%
Debt Cost 5.80%
Equity Weight 33.86%
Equity Cost 11.95%
WACC 7.88%
Leverage 195.31%

11. Quality Control: WH Smith PLC passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Fenix Outdoor

A-Score: 5.0/10

Value: 9.6

Growth: 4.0

Quality: 4.7

Yield: 5.6

Momentum: 1.0

Volatility: 5.0

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Ceconomy

A-Score: 3.8/10

Value: 6.2

Growth: 2.4

Quality: 2.5

Yield: 0.6

Momentum: 8.0

Volatility: 3.0

1-Year Total Return ->

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BHG

A-Score: 3.8/10

Value: 7.6

Growth: 2.4

Quality: 3.0

Yield: 0.0

Momentum: 8.0

Volatility: 1.7

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Momentum Group

A-Score: 3.5/10

Value: 1.5

Growth: 6.4

Quality: 6.3

Yield: 0.6

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

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WH Smith

A-Score: 3.5/10

Value: 5.7

Growth: 5.8

Quality: 2.7

Yield: 4.4

Momentum: 0.5

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.84$

Current Price

6.84$

Potential

-0.00%

Expected Cash-Flows