Lack of spoof books knocks sales at WH Smith

Smiths
WHSmith said a lack of new humour books hit its high street sales

Sales fell flat at WH Smith after lacklustre sales of spoof humour books, such as Ladybird's Book of The Hipster and Five on Brexit Island, failed to deliver festive cheer for the retailer. 

For the past two years WH Smith's high street division has been bolstered by trends for adult colouring-in books and comic versions of Enid Blyton novels. However, the retail chain has fallen into its old pattern of sales decline as boss Steve Clarke admitted the fad had "fizzled out". 

Jason Hazeley and Joel Morris holding the parody Ladybird books
Comedy Writers Jason Hazeley and Joel Morris are the men behind the parody Ladybird books Credit: Heathcliff O'Malley

High street revenues sales fell by 5pc, with like-for-like sales down by 4pc, after a “particularly strong performance” the previous year.

Mr Clarke said that sales of spoof humour books had fallen by over 50pc compared to last year despite a number of new ranges as more publishers jumped on the bandwagon. "So many people received a book last year that they were seen as last year's gift, even though some of them were even funnier. So it made book sales that much more challenging for us", he said. 

The WH Smith boss said that sales of its stationery products, which make up 50pc of high street sales, had been strong over the period, helped by demand for diaries, cards and gift wrap. However, while gross margins were up, they were "less than anticipated" due to the slump in book sales.

"Without any new book crazes taking hold in Christmas 2017, sales were always going to be on the back foot compared to last year, and so a flat performance is actually a reasonable outcome for WH Smith", commented Laith Khalaf at Hargreaves Lansdown. 

Mr Clarke has continued to a strategy of running WH Smith's high street division for profit, rather than attempting to steer a radical sales revival, and instead relying on the group's travel business for growth.

The retailer said it was continuing to reduce costs in its high street arm, with savings this year expected to be around £12m, ahead of targets.

WH Smith now has 249 shops overseas an 600 travel shops, which account for two-thirds of the group's operating profit. The division continued to do well, with total sales in the 20 weeks to January 20 up 7pc, boosted by new shops at Gatwick and Stansted and higher airline passenger numbers.

Steve Clarke inside WH Smith's store in Victoria
Steve Clarke inside WH Smith's shop in Victoria

Mr Clarke said that despite "some uncertainty in the broader economic environment, we remain confident that the group is well positioned for the year ahead as we continue to focus on profitable growth, cash generation and investing in new opportunities."

WH Smith confirmed that it was on track to meet consensus but shares fell by 46p, or 2.15pc, to £20.86 as investors were spooked by lower margins at its high street business. 

Tony Shiret, an analyst at Whitman Howard, said " The commentary on gross margin at the less significant high street business acts as a reminder that WH Smith does depend on external factors as well as its own ability to re-mix its business."

 

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