WH Smith weathers retail storm

By Chris Wills

LONDON (Reuters) - Bookseller and stationer WH Smith (SMWH.L) said its town centre stores did better than expected in the first half, helped by Christmas sales of books from celebrity chef Jamie Oliver and comedian Russell Brand.

The retailer, which is less vulnerable than some others to the economic slowdown because customers on average spend an affordable 5 pounds per visit, said pretax profit rose 8 percent to 64 million pounds, lifting its shares more than 2 percent.

"The economic environment remains uncertain and whilst we continue to be cautious we are confident in the outcome for the full year," said Chief Executive Kate Swann. Underscoring the company's improving prospects it proposed an interim dividend up 24 percent on last year at 4.6 pence per share.

Analysts had expected pretax profit of between 57 million pounds and 59 million, leading Swann to predict upgrades to forecasts for the company's full-year earnings of at least 3 to 4 percent.

WH Smith had been a casualty of changing consumer habits such as the growth of out-of-town retail malls and online retailing. In 2004 a takeover bid was withdrawn partly because of the company's pension liabilities.

But the company has proven resilient to changing trends and its shares have risen 15 percent since the start of the year, helped by a 90 million pounds share buyback announced in January.

OUTPERFORMER

Its shares rose 1.6 percent to 371.75 by 9:41 a.m., valuing it at around 585 million pounds. Its shares have outperformed the general retail sector .FTASX5370 by almost 50 percent in the last 12 months.