The market reacted sharply to WH Smith’s (LON: SMWH) latest trading update on Wednesday, sending shares in the travel retailer down 16% after the company cut profit expectations and announced plans to raise fresh capital.
Investors were unsettled by a combination of weaker trading, deteriorating performance in North America and a proposed share placing equivalent to around 20% of the company’s existing share capital.
WH Smith now expects headline pre-tax profit for the 2026 financial year to come in between £75 million and £90 million, reflecting softer consumer spending and disruption to international travel markets.
The company said sales growth slowed in recent weeks as Middle East flight disruptions and weaker consumer confidence reduced passenger spending across its airport retail network. Conditions were particularly challenging in North America, where like-for-like sales fell 4% over the past seven weeks.
Further concern came from the announcement of a potential impairment charge of up to £150 million related to the InMotion airport electronics business, alongside plans to close, sell or restructure underperforming locations.
To strengthen its balance sheet and support an ongoing turnaround programme, WH Smith also unveiled plans for a major equity raise. While management described the fundraising as a prudent move to reduce leverage and provide flexibility, existing shareholders face dilution from the issue of up to 26 million new shares.
Executive Chairman Leo Quinn acknowledged that economic uncertainty and weaker consumer demand have created headwinds for the business, prompting management to accelerate a self-help programme focused on cost savings, operational improvements and the exit of loss-making operations.
The scale of the share price fall suggests investors are concerned not only about current trading conditions but also about the potential impact on future earnings and the outlook for the group’s North American operations.
Despite revenue rising 5% over the latest reporting period, the combination of a profit warning, impairment charge and sizeable capital raise has overshadowed the positive elements of the update, resulting in one of the sharpest declines on the FTSE 250.
