Why is WH Smith (LON: SMWH) in news?

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 Why is WH Smith (LON: SMWH) in news?
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Highlights 

 

  • Shares of the high street retailer were up by over 6.5% on Wednesday.
  • The emergence of new omicron variant affected the sale recovery at the group’s outlets in airports and railway stations.
  • The group reported that its total revenue was 85% of 2019 revenue for the 20 weeks to 15 January 2022.

The FTSE 250-listed high street news, books, and convenience retailer, WH Smith Plc (LON: SMWH) has been in the news after it announced a trading update for the 20-week period to 15 January 2022 and shareholders’ revolt over the remuneration policy and bonus to its CEO Carl Cowling.

Shareholder’s disagreement over remuneration report 

The high street news, books, and convenience retailer has been hit hardly by insurgence among its shareholders with more than half of its investors refusing to pay back £550,000 bonus to its CEO Carl Cowling after it benefited from the UK government support received during the pandemic. 

On Wednesday, the group’s three of the main proxy advisers, who offer guidance to shareholders ahead of the annual meeting, indicated that over 53% of shareholders have registered their disagreement on the Cowling’s payout.   

According to the group’s remuneration report, the CEO was in line to receive a bonus of £550,000, with his £550,000 salary and pension payment of £85,000 for the year to September 2021. From April, his pay is expected to rise to £600,000, with the bonus of £960,000.

According to the group’s annual report, on top of £20 million in business rates relief in 2020, Cowling received £40 million in business rates relief and £11 million under furlough schemes in 2021.

Last year, a third of shareholders disagreed with the group’s remuneration report, forcing it to delay the pay rise of £25,000 that was given to Cowling in September 2021, taking his basic salary to £575,000. 

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Sales hit by new omicron variant

The emergence of the new Omicron variant affected the sale recovery at the group’s outlets in airports and railway stations after its travel division recovered by 94% of its pre-pandemic level in November 2021 and again fell back to 83% in December. The group reported that its total revenue was 85% of 2019 revenue for the 20 weeks to 15 January 2022.

The revenue from the Travel UK stood at 70% and in North America, it was 91% of the pre-pandemic levels, with increased passenger numbers during the festive season.  Sales at outlets located in railway stations were recorded at 74% in October and November that dropped to 69% in December and sales at outlets located in Airports were recorded at 59% and 71% in October and November, respectively that dropped to 65% in December. However, outlets located in hospitals showed a positive return in December to 94% from 92% and 91% of 2019 revenue in October and November, respectively.

The group’s online businesses, cultpens.com, funkypigeon.com, and whsmith.co.uk gave a strong performance over the 20 weeks to 15 January 2022 period.

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Stock Performance

With a market cap of £2,176.38 million, WH Smith Plc shares were trading at GBX 1,699, up by 2.20%, at 8:29 AM on 20 January 2022. The high street retailer has given a positive return of 9.26% to its shareholders in the last one year, while its year-to-date returns stood at 14.93% as of 20 January 2022.

Future Prospects

The group opened 16 of the 30 InMotion technology accessory stores across the UK air travel hubs and is planning to open its remaining stores by May. Further, two InMotion stores are in line to be launched in Dublin Airport by Spring, and more are expected to open in North America in the next three years, where it has won the tender for 60 sites.   

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