WH Smith warns slow tourism and travel recovery will dent profits

WH Smith operates a number of shops in Irish airports. Its 2022 pre-tax profit was expected to be in the range of €81m to €156m.

British newsagent and stationery retailer WH Smith has warned its 2022 profit is likely to be at the lower end of market expectations due to a slow and uncertain recovery in global tourism squeezing its stores in travel hubs like airports and train stations.

The company operates a number of shops in Irish airports. Its 2022 pre-tax profit was expected to be in the range of £70m to £135m (€81m to €156m).

However, WH Smith highlighted,  that a quicker recovery in its north American travel stores in the last two months meant that the group's 2021 performance would be slightly better than market expectations of a pre-tax loss of £68m.

The global travel and tourism sector does not expect to fully recover from the Covid crisis until at least 2023 as a result of uncertainty related to new virus variants and quarantine measures.

WH Smith's revenue globally from its travel-related stores, its biggest source of income, was still only at 55% of 2019 levels in the six months to the end of August. The company said that finance charges related to its bond issue in April would also affect its profitability in 2022.

Late last year WH Smith said it remained committed to its Irish-based shops at Cork, Dublin and Shannon airports despite Covid restrictions having wiped out virtually all income and revenue from them in 2020.

JP Morgan Cazenove analysts has downgraded the group's 2022 and 2023 estimates for pre-tax profit due to the slower-than-expected recovery in global travel, and said it doesn't expect its underlying profitability to return to pre-pandemic levels until 2024.

• Additional reporting Reuters