WH Smith says margin growth offsets sales fall

LONDON Wed Jan 23, 2013 7:24am GMT

Pedestrians walk past a WH Smith shop, in London October 6, 2008. REUTERS/Alessia Pierdomenico

Pedestrians walk past a WH Smith shop, in London October 6, 2008.

Credit: Reuters/Alessia Pierdomenico

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LONDON (Reuters) - British books and stationery retailer WH Smith (SMWH.L) said improved margins helped underpin profits and offset an expected fall in sales over the Christmas period.

The group, which trades from over 600 town centre stores and over 600 outlets at airports, train stations, hospitals, motorway service stations and work places, on Wednesday said sales at stores open a year fell 5 percent in the 20 weeks to January 20.

That marked a slip from the 4 percent decline recorded in the 10 weeks to November 10.

Like-for-like sales fell 5 percent at its high street stores and were down 4 percent in the travel division, although it said gross margins had improved strongly in both divisions. It said it was confident of making further progress in the year.

Under outgoing boss Kate Swann the firm has underpinned profits by offsetting the impact of a tough consumer environment and falling sales with margin improvements and cost cutting.

The group has expanded at home and abroad into more lucrative airport and railway station locations, moved towards more profitable products and fewer markdowns, and exited a struggling entertainment market highlighted by HMV HMV.L and Blockbuster going into administration last week.

Steve Clarke, managing director of the firm's High Street division, will succeed Swann as Chief Executive on July 1.

Shares in the firm closed at 652 pence on Tuesday, up 22 percent on a year ago, valuing the business at around 830 million pounds.

(Reporting by Neil Maidment)

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