WH Smith raises £100m as it warns on profits due to Iran war
WH Smith raised £102m and cut profit guidance after weaker airport traffic, especially in the US, amid the Middle East conflict and softer demand.
Intelligence analysis by GPT-5.4 Mini
WH Smith is using fresh equity to shore up its balance sheet and clean up underperforming sites after travel-store trading weakened in the UK and North America. The company says the war in the Middle East has reduced passenger numbers and hurt airport sales.
WH Smith is like a shop chain inside airports and train stations. Fewer travelers are buying things, so it made less money and asked investors for more cash to help close weak stores and fix the business.
Analysis
What happened
WH Smith raised £102m through a share sale and warned that full-year profits will be lower than previously expected. The company now expects pre-tax profit of £75m to £90m, down from earlier guidance of £90m to £105m.
Why the warning came
The retailer said shopper numbers at airport stores have weakened, especially in North America, where revenue at its airport operations fell 2% year on year in the seven weeks to 6 June. It also said its UK airport business had already been hit by the conflict in the Middle East. Management linked the downgrade to lower passenger numbers, weaker consumer demand, reduced brand marketing, more promotions, and inflation pressure.
The company said it assumes there will be no near-term improvement in consumer confidence and that jet fuel supplies can be maintained.
What the cash will be used for
WH Smith said the new capital will strengthen its balance sheet, reduce debt, invest in technology, and help it shut unprofitable stores. Executive chair Leo Quinn described this as a “self-help” programme, saying the company plans to sell, exit or renegotiate loss-making or low-return operations and, where suitable, replace directly run sites with franchises in smaller markets.
Wider pressure on the business
The profit warning lands while WH Smith is still dealing with the fallout from an accounting scandal in its North American arm, where profits were overstated by as much as £50m. The company’s share price has fallen sharply over the past year, and the article says shares dropped to their lowest level since 2010 after the warning.
The group also plans to book a £150m non-cash impairment charge this year and shut some stores in Europe and North American resorts. That suggests the business is retrenching while trying to rebuild trust and profitability.
Key points
- WH Smith raised £102m by issuing about 26 million new shares.
- It cut full-year profit guidance to £75m-£90m from £90m-£105m.
- Airport sales were hurt by weaker passenger numbers tied to the Middle East conflict.
- The company plans to shut unprofitable stores and invest in technology.
- WH Smith is still facing fallout from a North American accounting scandal.
If passenger numbers stabilize and consumer spending improves, WH Smith could benefit from its large travel-retail footprint. The new money also gives it room to pay down debt, invest in technology, and remove stores that are losing money.
If travel demand stays weak and the Middle East conflict keeps affecting flights, airport sales could remain under pressure. The company is also still carrying reputational damage from the accounting scandal, which could make recovery slower and harder.
