WH Smith has cut its annual profit outlook again and unveiled plans to raise equity as the retailer said there were fewer passengers going through its travel hubs due to the Middle East conflict.
The chain, which incorporates shops in travel locations such as airports and train stations, said consumers had been tightening their budgets.
It was now expecting to report a pre-tax profit of between £75 million and £90 million for the full year – down from a previously guided range of £90 million to £105 million.
It marks the second time this year that the retailer has cut profit expectations.
WH Smith said the changed outlook reflected “the observed and anticipated decline in passenger numbers and weakening consumer demand across all divisions”.
Revenues from its UK airport shops dipped by 1% in the 14 weeks to June 6, compared like-for-like with the same period a year ago.
This was partly driven by flight cancellations and disruptions to the Middle East over the period, according to the firm.
However, revenues from hospital shops were up by 7% year-on-year, and rail revenues rose by 2%, offsetting the decline at airports to lead to 2% sales growth in the UK overall.
Meanwhile, WH Smith also said it was planning an equity raise through the issuing of up to 26 million new shares representing about 20% of its existing share capital, alongside a separate offer for retail investors in the UK.
It hopes the raise will bolster its balance sheet and help drive investment plans.
Company directors including executive chairman Leo Quinn and its finance chief are set to participate and intend to contribute about £1.73 million, WH Smith said.
Mr Quinn said: “There is no doubt that current economic uncertainty and its effect on consumer appetite for spending has created headwinds.”
He said the equity raise was a “proactive step to accelerate our transformation of what is, at heart, a good business with some great people and clear opportunity for profitable growth”.
The chairman also said WH Smith had been taking steps including to “sell, exit or renegotiate loss-making or low-returning situations” including replacing company-owned shops with franchises.
WH Smith sold its high street chain of shops to private equity firm Modella Capital last year, which was subsequently rebranded to TG Jones.
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