WH SMITH (SMWH) £14.45

Loss to date: 14.3%

Original entry point: Buy at £16.86, 27 January 2022

While shares in WH Smith (SMWH) have struggled this year, we were pleased to see the books, stationery and snacks seller report a return to profit for the six months to 28 February.

The retailer posted £18 million pre-tax profit, marking an impressive year-on-year turnaround from losses of £38 million as total group revenue ticked up 45% to £608 million. The FTSE 250 firm also insisted its recovery from the pandemic is ‘well underway’, with travel sales surging past pre-pandemic levels in recent weeks.

WH Smith stressed it is managing the impact of inflationary pressures thanks to its low ticket-value categories and strong supplier relationships, but the shares reversed on results day (27 April) after it flagged the risks from some ‘uncertainties in the broader global economy’ and warned the Ukraine conflict may impact the business through rising shipping, sourcing and supply chain costs.

Despite near-term challenges, we remain convinced WH Smith is well positioned to benefit from new store opening opportunities in the global travel market and is a resilient business that generates excellent returns on capital.

SHARES SAYS: WH Smith is a resilient retailer with exciting international recovery potential. Keep buying. 

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