MARKET REPORT: WH Smith to benefit from travel boom

WH Smith is in pole position to benefit from a travel boom this summer, according to analysts at RBC. 

For years the retailer’s stand-out stores have been the ones located in train stations and airports. 

These one-stop shops for essentials ranging from food and books to pharmacy and beauty products have had consistently good footfall and, brokers say, it has done a good job at broadening its range to provide the odds and ends people taking a long trip want to stock up on. 

But this part of WH Smith’s business was hammered by the Covid outbreak, which brought travel of all kinds grinding to a halt. 

Summer boost? WH Smith is in pole position to benefit from a travel boom this summer, according to analysts at RBC

Ministers and City analysts alike have been cautious about making predictions about this summer, but the US and Australia are providing good signs of what is to come, RBC says. 

Revenues at WH Smith’s travel stores in both countries have been picking up, and are expected to rise further, since domestic tourism restarted. Las Vegas is tipped to do particularly well. This is all evidence, analysts say, that people are keen to go on trips both in their own countries and abroad as soon as they are able to. 

It is also being boosted by its online greeting cards business, Funky Pigeon, and RBC believes WH Smith’s card-selling rivals on the High Street ‘remain stressed’, given the company the ability to snap up more market share. 

Importantly too, brokers believe WH Smith will be able to keep opening new stores – potentially moving into empty airport stores as other retailers bail out. 

According to RBC: ‘This is similar to 2010 after the financial crisis, when WH Smith was able to take on more good quality space, due to weaker competitors exiting and as WH Smith has the financial firepower to invest in stores.’ RBC upgraded its rating on WH Smith’s stock from ‘sector perform’ to ‘outperform’ on the buoyant outlook and hiked its target price from 2100p per share to 2200p. Investors sent shares in the group higher by 1.5 per cent, or 26.5p, to 1860p by the close.

The boss of Anglo-German holiday giant Tui expressed similar optimism. Friedrich Joussen told the BBC the company is ‘still confident that we will have a decent summer’ and is expecting to operate 75pc of its normal schedule over the season, which is crucial for airlines and holiday companies. 

Tui finished up 0.6 per cent, or 2.3p, to 391.5p, while Easyjet rose 0.6 per cent, or 5.4p, to 995.4p and British Airways-owner IAG up 0.6 per cent, or 1.3p, to 208.25p. 

The wider market had a cheerful end to the week, as the FTSE100 rose 0.5 per cent, or 36.03 points, at 7019.53. The FTSE 250 climbed 0.2 per cent, or 50.14 points, to 22,522.18. 

Travel shares: Tui finished up 0.6 per cent, or 2.3p, to 391.5p, while Easyjet rose 0.6 per cent, or 5.4p, to 995.4p and British Airways-owner IAG up 0.6 per cent

The London Stock Exchange Group tumbled to the bottom of the Footsie leaderboard after an influential investor advisory group – Institutional Shareholder Services – urged the company’s backers to vote against chief executive David Schwimmer’s salary at its upcoming annual meeting. 

LSEG is proposing to hike his base salary by £200,000 a year – which it says it justified because the £20billion mega-takeover of data giant Refinitiv makes it a more complicated business. Shares fell 2.5 per cent, or 200p, to 7700p. 

Birmingham Bullring landlord Hammerson rose 0.9 per cent, or 0.37p, to 39.6p, after it pledged to cut rents for retail tenants by 30pc to encourage them to stay in its shopping centres.

Man Group is preparing for a rush of money from investors later this year as they ready for the Covid recovery. Investment management firm Man took another £435m of money from clients in the first three months of this year. 

Shares edged up 0.5 per cent, or 0.9p, to 166.35p.