WH Smith's profit forecast brightens after strong Christmas sales

By Rahul B

(Reuters) - British books, newspapers and stationery retailer WH Smith Plc (SMWH.L) firmed up its profit forecast on Wednesday after reporting strong sales from its stores at airports and train stations over the Christmas period.

The company, which operates more than 1,300 stores, mostly in the UK, said comparable group sales were up 1 percent in the 21 weeks to Jan. 21, with total sales rising 2 percent.

Sales at its Travel division, which comprises outlets at airports, railway and motorway service stations as well as hospitals and workplaces, rose 10 percent, helped in part by currency movements as the company operates over 190 shops abroad.

"As a result of the performance in Travel we expect group profit growth for the year to be slightly ahead of plan," Chief Executive Stephen Clarke said in a trading statement.

The company's shares were up 7 percent at 1522 pence by 0947 GMT, making them the top performer on the FTSE Mid Cap index.

RBC Capital Markets analysts said strong growth in Travel against tough comparisons so early in the year was encouraging. The company's financial year ends in August.

However, the group, which will celebrate its 225th anniversary this year, said comparable sales in its high street business were down 3 percent with total sales falling 4 percent.

Its Travel business has consistently outperformed the High Street unit, owing to increased competition from other retailers and supermarkets and online shopping.

WH Smith reported its first rise in group like-for-like sales in 12 years last October with the improvement coming primarily from robust sales by the travel business.

But the company also said on Wednesday that its cost efficiency programme was on track and gross margin was up year-on-year.

In October Clarke had told reporters the company was looking to cut costs by consolidating factories and negotiating better prices with suppliers to cut its costs.

(Reporting by Rahul B in Bengaluru, Editing by Susan Thomas, Greg Mahlich)