WH Smith warns of an up to £20 million of monthly cash burn

Written by: Wajeeh Khan
January 20, 2021
  • WH Smith warns of an up to £20 million of monthly cash burn.
  • The retailer says Christmas trading topped expectations.
  • WH Smith values cash and available credit at £340 million.

In a statement on Wednesday, WH Smith plc (LON: SMWH) said that trading during the Christmas period topped expectations. But Prime Minister Boris Johnson ordered another national lockdown in the first week of January to minimise the fast spread of the new variant of the flu-like virus that is likely to result in up to £20 million of monthly cash burn, the retailer added.

WH Smith jumped more than 2% in premarket trading on Wednesday and gained another 5% in the next hour. Including the price action, the stock is now trading at £16.86 per share versus £7.0 per share in March 2020. The price action should come in handy if you’re interested in investing in the stock market.

WH Smith values cash and available credit at £340 million

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

The ongoing COVID-19 crisis has so far infected more than 3.4 million people in the United Kingdom and caused over 91 thousand deaths. In November and December, the Swindon-based company said on Wednesday, it generated cash that pushed its cash and available credit to £340 million – a position stronger than it had expected.

The London-based company concluded 2020 with £90 million of liquidity. In December, its high street business recorded sales at 92% of the level seen in the same month last year, thanks to the retailer’s new work-from-home ranges coupled with the seasonal increase during the Christmas period.

In separate news, the British multinational electrical and telecommunications retailer, Dixons Carphone plc said it will push the government to continue to allow “Click and Collect” services.  

Tip: looking for an app to invest wisely? Trade safely by signing-up with our preferred choice, eToro: visit & create account

WH Smith’s overall sales stand at 59% of last year’s level

WH Smith also said on Wednesday that its high street stores continued operations amidst the ongoing pandemic, strictly following the guidelines laid out by the government that sees newsagents as essential retailers.

In the 20 weeks that concluded on 16th January, the retailer’s travel business reported sales at only 37% of the last year’s level. Consequently, overall sales during the period, came in at 59% of the year-ago level. In May 2020, WH Smith had reported a 7% annualised increase in its fiscal first-half revenue.

WH Smith performed largely downbeat in the stock market last year with an annual decline of close to 45%. At the time of writing, the British retailer that operates a chain of high street, railway station, airport, port, hospital and motorway service station shops has a market capitalisation of £2.22 billion.