WHSmith Group Chief Executive Carl Cowling has said that Dixons Travel’s exit from the UK market represents an opportunity to expand its own presence in consumer electronics, notably through its InMotion brand.
Dixons Carphone is to close its airport business under the Dixons Travel name, citing the financial hit from reduced traffic and store footfall and the ending of airside tax free shopping by the UK government among the reasons.
Speaking to analysts last week as WHSmith announced its half-year results, Cowling said: “I see Dixons [exiting the market] as a big opportunity. InMotion is a great brand in the US and we have been trialling it in Leeds Bradford Airport for just over a year. It is a brand that can work very well in UK airports. There will be competition for these spaces but we have been talking to airports already about launching InMotion.”
He said that the benefits of scale offered by the wider WHSmith Group presented a solid business case for expansion in the consumer technology category at airports in the UK, despite the loss of airside tax free sales.
Cowling said: “What is different for us is that we have all of the back end infrastructure in place, we have cost efficiencies, shared warehousing, shared administration. It will need a slight recutting of the offer, more accessories weighted than hardware weighted, and we believe that will work for the British consumer and for landlords. I’m excited by the opportunity.”
He added that the company is seeking more opportunities around Europe – with Dixons also exiting stores at Dublin and Oslo airports. “There will be tenders coming up and we will put a lot of resource into understanding these opportunities,” said Cowling.
In the six months to 28 February, the WHSmith Travel business posted revenue of £150 million, down by -65% year-on-year. The impact of COVID-19 resulted in a trading loss of £28 million compared to a profit of £49 million a year earlier. Within this, the international business including North America had losses of £9 million.
In UK Travel, revenue in the six months to 28 February was £79 million. Compared to 2019, air was 16%, the hospital channel was 71% and rail was 22% of that year’s sales. This resulted in a trading loss of £19 million compared to a profit of £40 million.
Of the UK outlook, the company said: “Looking ahead to our peak summer trading period, we expect leisure customers to return first, accounting for around 80% of the market, and we know that WHSmith customers trend more towards leisure than business travel. We are also in active discussions with our landlords and we have recently opened a new bookshop at London Heathrow Terminal 2 and plan to open a Costa Coffee store at Aberdeen Airport in the second half.”
In Travel internationally, revenue for the half, including MRG and InMotion, was £71 million. The trading loss for the period was £9 million compared to a profit of £9 million a year earlier.
As at 28 February 2021, the global Travel business had 745 open from a total of 1,168 operations. WHSmith said it had 100 new stores set to open in the next three years, with over 60 in North America.
Original source - The Moodie Davitt Report