Shares in WH Smith plunged as much as 17% after the travel retailer suspended its dividend and cut its full-year profit forecast. The group now expects headline profit before tax and non-underlying items of £90m–£105m, down from a prior range of £100m–£115m, saying the conflict in Iran has reduced passenger numbers and spending at airports. Like‑for‑like sales rose 2% in the first seven weeks of the second half, but management warned it did not expect an immediate recovery in consumer traffic.

Dividend suspended as travel revenues wobble WH Smith said it had suspended its dividend and trimmed expectations for headline profit as the conflict in Iran reduced air travel and damped consumer spending at airports. The retailer, which operates shops in airports and railway stations, narrowed its full-year forecast to between £90m and £105m in headline profit before tax and non-underlying items; the previous range had been £100m to £115m. Shares slumped sharply on the announcement, tumbling as much as 17% in early trading before settling at a lower level. The slide reflected both the profit downgrade and investor unease about the knock-on effects of reduced passenger numbers. WH Smith’s interim trading showed a modest like‑for‑like sales rise of 2% across the first seven weeks of the second half, a period that coincided with the outbreak of hostilities in Iran and neighbouring areas. The company said it did not expect an immediate rebound in passenger traffic or consumer spending. While some demand has held up in non-travel outlets, the travel segment is the most exposed to swings in international flying and jet fuel costs. How the Iran conflict is hitting travel retail International hostilities have had a direct commercial effect. Airlines have cancelled or diverted flights, juggling routes and capacity, while jet fuel prices have risen. Those factors have combined to lower passenger throughput at major hubs and to reduce discretionary spending by travellers, particularly in non-essential categories such as books, gifts and travel accessories. Airports generate a higher margin per passenger than high-street stores, and travel retailers rely on a steady volume of international passengers to hit sales targets. WH Smith’s airport shops are especially vulnerable because travellers often have less time, and are more price-sensitive, than they would be in other retail settings. Reduced footfall is not the only channel through which the conflict pushes on earnings. Rising fuel and operating costs can squeeze airline schedules, depress consumer confidence and add to broader inflationary pressure — and that, in turn, can feed through to lower in-airport spending. Investor confidence and the legacy of accounting issues WH Smith’s warning lands against a backdrop of earlier problems. In August the company disclosed inflated earnings at its North American business, which led to the abrupt departure of its chief executive and prompted an inquiry by Britain’s financial regulator. WH Smith said on Thursday it continues to co-operate with the regulator. The accounting episode left investors cautious and reduced the firm’s margin for error. Where a business with a clean record might have weathered a short-term drop in travel revenues, WH Smith now faces added scrutiny from shareholders asking tougher questions about governance and transparency. Analysts said the dividend suspension will conserve cash while the group navigates lower travel demand and any fallout from the regulator’s inquiry. That decision will please creditors but disappoint income-focused investors who had come to rely on WH Smith’s payout.

Related Articles

WH Smith now expects headline profit before tax and non-underlying items of £90m–£105m for the full year.

This article was created with AI assistance.