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Investing.com -- WH Smith’s (LON:SMWH) shares rose over 6% on Wednesday after the company reported increased revenue driven by strong travel retail demand.
The company, with stores in airports, stations, and hospitals, saw growth across key markets despite economic challenges.
For the 21 weeks ending January 25, WH Smith’s total group revenue increased by 3% compared to the previous year, with travel revenue rising by 7% overall.
The results were particularly strong in its UK travel division, where revenue grew by 7% year-on-year, supported by increased passenger numbers and expanded product offerings.
The company noted that its "one-stop-shop" travel essentials format, which includes extended health and beauty ranges, has continued to drive profitability.
North America, a key growth market for WH Smith, saw a 6% rise in revenue on a constant currency basis.
The company attributed this to improvements in product range and the introduction of new categories. It also announced new store openings, including eight outlets at Orlando International Airport and four at Portland International Airport.
While travel essentials performed well in the region with a 20% increase in revenue on a constant currency basis, the performance of its InMotion electronics business declined by 9%.
The company’s operations in the rest of the world also performed strongly, with revenue rising 16% on a constant currency basis. WH Smith stated that it remains well-positioned to capitalize on new opportunities as they arise in international markets.
Analysts at RBC Capital Market believe that WH Smith has the potential to be a strong investment opportunity. They expect the company to experience significant growth in its travel retail business and generate substantial cash for shareholders.
However, its UK high street division continued to struggle, with revenue declining by 6%. WH Smith said it had managed stock levels well during the Christmas trading period and remained on track to achieve its targeted cost savings of £11 million for the full year.
"The Group has had a good start to the financial year," said chief executive Carl Cowling in a statement, adding that strong travel demand and store expansions have placed the company in a solid position.