Investing.com — WH Smith (LON:SMWH) in a stock exchange filing on Monday said it is considering options for its high street division, including a possible sale, following media reports.
Shares of the retailer were up 2.9% at 03:55 ET (08:55 GMT).
The move, if realized, could mark a shift for the company as it seeks to sharpen its focus on its faster-growing and more profitable travel business.
The high street arm, which has faced mounting challenges in recent years, accounts for a much smaller portion of WH Smith’s overall trading profit compared to its travel division.
RBC analysts noted that the high street business has struggled to maintain momentum amid declining footfall and shifting consumer habits, despite efforts to adapt.
Pre-pandemic, WH Smith managed to offset declining sales with margin improvements, largely driven by a pivot to higher-margin categories like stationery and years of cost-cutting initiatives.
However, profitability has weakened since the pandemic, and the outlook for this part of the business remains uncertain.
Selling the high street division could allow WH Smith to fully dedicate itself to the travel segment, which already contributes around 85% of its trading profit.
RBC analysts flagged the move as a potential catalyst for unlocking greater shareholder value, removing an obstacle that has likely weighed on the company’s shares.
In the travel business, WH Smith is benefiting from a robust pipeline of new store openings in airports, railway stations, and hospitals.
The British retailer holds a strong position in the UK market across these key channels, while its presence in the United States—where it currently commands around 13% of the travel Essentials market—is poised for further growth.
Recent trends in the US tender market, where hybrid duty-free and duty-paid models are gaining traction, offer further opportunities for WH Smith to expand its footprint.
“In WH Smith’s case we see potential for it to push further into food to go, including in the key US market, which we think is currently underserved in this area,” RBC said.
Globally, the company’s travel segment is also positioned to benefit from a recovery in passenger numbers across Asia.
While profitability in this region remains tempered by upfront infrastructure costs, these investments are seen as necessary to build brand scale and lay the groundwork for long-term growth.
Beyond organic expansion, WH Smith could look to participate in further mergers and acquisitions in the travel retail sector.
As per RBC, the industry is seeing increased consolidation, with recent deals such as the merger between Dufry and Autogrill delivering cost savings and synergies.
WH Smith may look to replicate similar strategies to strengthen its landlord relationships and enhance its procurement efficiency.
