It is better to travel than to arrive, so it is said, and retailer WH Smith Plc (LON:SMWH) has taken this old adage to heart.
Thursday’s trading update, covering the final quarter of WH Smith’s fiscal year, is once again expected to show that the newspapers and books seller’s shops in travel hubs are doing well while the rump of the High Street estate is slowly crumbling.
The investment being pulled from the High Street has been redirected to its outlets at service stations, airports and the like.
The number of travellers is rising, whereas the number of people trudging around shopping centres is declining, so it is small wonder WH Smith is planning on opening between 15 and 20 new ‘travel’ sites in the UK this year.
Investors will be looking for signs that the travel side of the business is still thriving, including the nascent overseas business.
“Q4 is peak season for Travel and we expect strong revenue trends in Q4, helped by new space additions,” said RBC Capital Markets.
“We expect High Street footfall to remain under pressure but WH Smith should see gross margin upside from mix to higher margin areas like fashion stationery, and further rental and technology-related cost savings. High Street’s profit outcome each year will partly depend on the new product and books publishing pipeline, which has been softer in the past year compared to FY16/17.
“Encouragingly for WH Smith, higher margin Stationery LFL [like-for-like] sales have grown every year on the High Street in the last three years,” the broker noted.
Investors eye performance of Hunting’s Titan
Given the recent deal activity and apparent renewal of big investment into America’s Permian shale basin (a number of big money acquisitions saw billions of dollars change hands), there’s likely to be a higher degree of interest on Hunting Plc’s (LON:HTG) results.
Hunting’s Titan business unit, acquired six years ago, is a well-positioned beneficiary of the sort of investments being targeted in US shale generally and the Permian basin specifically.
“Titan is already back to peak 2014 levels even with a rig count ~50% lower and pricing not back to peak. In-sourcing & automation could support margin upside,” analysts at Exane said in a June note.
“Even after strong upward revisions to consensus this year, we still see upside to estimates (Q1EBITDA of USD35m was above ~USD130m consensus run-rate; Exane at USD159m) as activity improves in a variety of end markets.”
Plainly, Titan’s performance will be a key highlight of Thursday’s interim results.
Hays sees profits beating forecasts
Ahead of its full-year results on Thursday, Hays plc (LON:HAS) has said it expects operating profit to be “marginally ahead” of market forecasts of £240.9mln and that it is considering increasing shareholder returns.
In a final quarter trading update in July, the recruitment firm said its strong cash position and underlying trading would “enable the board to consider increasing shareholder returns significantly, in line with our dividend policy”.
A strong performance in the German jobs market has been the key driver of growth in net fees, a measure of recruiters’ gross profit. The company also saw an improvement in the UK and Ireland division in the fourth quarter despite weaker business confidence due to Brexit uncertainty.
Investors will be keen to see whether Hays has seen a further recovery in the UK and what the company’s outlook is for its markets.
Thursday, August 30:
Trading update: WH Smith Plc (LON:SMWH)
Finals: Hays plc (LON:HAS)
Interims: Churchill China PLC (LON:CHH), Hunting Plc (LON:HTG), Amigo Holdings PLC (Q1) (LON:AMGO), AFI Development PLC (LON:AFRB), Arrow Global Group PLC (LON:ARW), ASA International Group PLC (LON:ASAI), Eddie Stobart Logistics PLC (LON:ESL), Chesnara Plc (LON:CSN)
Ex-dividends to clip 0.6 points off FTSE 100 index: InterContinental Hotels Group PLC (LON:IHG), St James’s Place PLC (LON:STJ)
Economic data: UK consumer credit, money supply numbers; US weekly jobless; US housing starts; Philly Fed business outlook survey