British retailer WH Smith is planning to sell its long-established high street business and shift its focus towards the travel retail sector in response to ongoing challenges in the retail industry.
The 232-year-old retailer announced on Monday that it is exploring the possibility of selling more than 520 high street stores that primarily sell newspapers, books, and stationery. High street refers to the main commercial street in a city in the UK, where many bustling commercial streets are known as high streets.
In a statement on the London Stock Exchange website, WH Smith confirmed that it is exploring potential strategic options for this profitable and cash-generating business segment, including a possible sale. The statement added that there is currently no guarantee of reaching any agreements.
Additionally, the company plans to add 90 new stores, primarily located in travel destinations such as airports, train stations, and highway service areas.
Based in Swindon, Wiltshire, WH Smith has been heavily expanding its travel retail business in recent years, with 580 stores in UK airports, hospitals, train stations, and highway service areas. Its global travel retail network spans 32 countries with a total of 1,200 stores. The travel business now accounts for three-quarters of the group’s total revenue and contributes 85% of the trading profit.
According to CNBC reports, as a member of the FTSE 250 index, WH Smith’s move aligns with its long-term focus on growing markets. Kate Calvert, an analyst at investment firm Investec, mentioned that investors should be optimistic about this plan, as selling the high street business will enhance the company’s valuation.
Boosted by the news, WH Smith’s stock price rose about 5.5% on Monday, reversing a nearly 11% decline in 2024, with the latest trading price up by 2.9%.
WH Smith’s decision comes at a time when the UK high street retail sector is facing challenges. On one hand, the rapid growth of e-commerce is impacting traditional high street stores, while on the other hand, policy changes are increasing operating costs for retail businesses. In October 2024, the UK government raised the minimum wage and National Insurance tax, further intensifying the pressure on the retail industry.
Last Thursday, supermarket chain Sainsbury’s announced the layoffs of 3,000 employees. A survey by the British Retail Consortium revealed that many retailers are warning of possible layoffs this year to cope with higher tax costs.