£90 million shareholder return for WH Smith investors

In spite of the board being cautious about its outlook and trading conditions on the High Street being competitive over the Christmas period, WH Smith has announced it will return £90 million to shareholders.

The announcement came ahead of the group’s annual meeting later at which shareholders were due to vote on a bonus package for Kate Swann, chief executive.

Under the proposed package, Ms Swann will receive £4 million of shares over the next 3 years providing she remains with the company and meets demanding targets. Ms Swann has been with the books and stationery retailer for nearly 5 years and has been credited with reviving the company.

The retailer said trading over the festive period had met its expectations with like-for-like sales falling 3% in its high street stores during the 10 weeks to January 26.

For the group, sales rose 1% in the 21 weeks to January 26 with like-for-like sales down 2%. Trading at the travel division (which includes shops in airports) usually peaks in the summer months, however sales rose by 13% and like-for-like sales 1% in the 21 week period as it expanded its motorway service station outlets.

In high street stores, sales of entertainment products had performed better than expected due to the sales of games, but as these are lower margin goods the gross margin progress was at the bottom end of the group’s expectations.

Furthermore, Russell Brand and Richard Hammond autobiographies sold well, so too did the latest cookery books from Nigella Lawson and Jamie Oliver.

At the end of this month, shareholders are set to receive a 33p a share special dividend which will be combined with a 67 for 74 share consolidation to avoid having to adjust the dividend payment. That will cost £60 million with the other £30 million being used to buy back shares.

Charlie Nichols of analysts Landsbanki said the return of cash was ‘a statement of confidence in a difficult retail environment.

However, in early trading yesterday, shares fell 3.1% to 338p.

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