WH Smith PLC

WH Smith CEO Clarke to step down in October

The news accompanied the high street retailer's third-quarter trading update which showed total sales up 15% and like-for-like sales growth of 1%

WH Smith Travel store
WH Smith's dominant Travel arm grew sales by 26%, or by 7% if last year's US acquisition was not included

WH Smith PLC (LON:SMWH) said chief executive Stephen Clarke will step down from the tatty-carpeted retailer later this year, after 15 years at the company and six in the top job.

The FTSE 250-listed firm, which plans to replace Clarke with Carl Cowling, boss of the group’s High Street business, acompanied the news with a solid third-quarter trading update, showing total group sales rose 15% in the 11 weeks to 18 May, with like-for-like sales (LFL) up 1%.

READ: City broker “really excited” by WH Smith’s US potential

WH Smith stores, where 142 Post Office franchises were added to the 42 it had in the first half, continued with the profit-focused strategy to manage the slow decline of the UK high street, which is such that a long-running Twitter account keeps track of the often terrible state of the chain's floors and product displays.

High Street sales were down 1% over the full-year, as they were in the first half, with LFL sales declining by just 1% compared to a 2% fall in the first half of the year.

Over in the Travel arm - the group’s planes, trains and hospitals-focused growth engine - total sales were up 26%, or 7% excluding the October acquisition of US airports chain InMotion. Travel LFL sales were up 3%, as they were in the first half.

The division is on target to open around 20 units in the UK including 10 in hospital, which are due to overtake rail and become the group's second biggest channel by revenue this year, with “good potential” to grow this segment further.

On the trading outlook, Clarke said the board remained confident for the full year outcome, adding: “Whilst there is some uncertainty in the broader economic and political environment, we are well placed as we approach the key summer trading period in Travel. We continue to focus on profitable growth, cash generation and investing in the business to position us well for the future."

On the CEO’s departure, which is inked in for October, chairman Henry Staunton said Clarke had made an “outstanding contribution” and driven “exceptional shareholder value” over the last six years. The shares have risen from 750p to above 2,000p during his tenure.

Staunton said Cowling, who joined the group in 2014 after stints at Dixons and Carphone Warehouse, has been “instrumental” in the development and execution of the high street strategy.

Broker Peel Hunt said it was "a good current trading statement" from WH Smith, with High Street LFL slightly better than expected and margins in both businesses as expected, albeit that the update was "overshadowed by the departure of the highly-regarded CEO".

With a new CEO, Peel Hunt's analysts see "no reason to believe why the strengths of the company won't continue to come to the fore" and while the market will be surprised, "we would class any weakness as a major buying opportunity as the new management team takes the opportunity that Clarke created".

WH Smith shares fell by more than 2.5% in the first few minutes of trading Tuesday, but by mid morning were almost back to flat at 2,024p.

-- Adds broker comment, share price --

Quick facts: WH Smith PLC

Price: £19.23

Market: LSE
Market Cap: £20.71 m
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