WH Smith shares tank as it warns coronavirus outbreak will hammer airport sales

WH Smith has warned that the coronavirus outbreak looks set to hit its annual revenues to the tune of £130million and profits by up to £40million.

With fewer holidaymakers traipsing through airports, the travel hub-focused retailer said the outbreak had started to have a ‘significant impact’ on its business. 

In the last two weeks, travel restrictions have triggered a ‘material reduction’ in passenger numbers across Britain’s transport hubs, the company said. 

WH Smith, which saw its share price drop over 16 per cent this morning, expects revenue across its British airport sites to fall by 35 per cent in March and April.

In the US and the rest of its international operations, including in Asia, the group now expects its second-half revenue to fall by around 20 per cent.  

The company said that while the outbreak did not appear to be having any ‘significant impact’ on its high-street arm, it recognised that it could end up putting people off going to the shops and triggering a reduction if footfall. 

WH Smith said it was taking action to protect the company’s profitability and ‘taking all necessary action to reduce costs.’

The company’s share price fell over 16 per cent earlier this morning and is currently down 11.28 per cent or 179p to around £14.08. 

Britain’s travel hubs account for around 60 per cent of the group’s travel arm revenue.  

Neil Wilson, chief analyst at Markets.com, thinks US president Donald Trump’s latest European travel ban could mean WH Smith’s bottom line will be hit harder than it thinks.

Wilson said: ‘You have to feel a little sorry for a company that has done a brilliant job of pivoting away from the struggling British high street to driving all its revenue and profit growth from airports and train stations. 

‘A rapid decline in footfall at travel sites because of the coronavirus is hitting revenues and will result in a material decline in profits this year. 

‘Trump’s 30-day European travel ban only makes things worse and threatens to make today’s estimates only partially reflective of the level of damage that could be done this year.’

The profit warning came as WH Smith posted a 7 per cent rise in group revenue for the first half of the year. But, on a like-for-like basis, revenue was down 1 per cent. 

Revenue across the group’s travel arm grew by 19 per cent over the period, and up 2 per cent on a like-for-like basis. The retailer’s like-for-like revenue from its high-street operations fell by 4 per cent. 

W H Smith expects its first half revenues to come in ‘in line with market expectations’, adding that it was ‘well positioned to benefit from the normalisation and growth of the global travel market.’

It is proving to another brutal day on the stock market for airlines. Shares in Easyjet are down over 6 per cent, while Ryanair’s share price is down over 4 per cent and British Airways owner IAG has dropped over 8 per cent.