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Retail

WH Smith Sees £40m Profit Hit From Coronavirus

Sales at WH Smith's stores in British airports have slumped by 35% as the coronavirus outbreak curbs travel, potentially denting its profit by up to £40 million ($51 million) this year, the British retailer said.

Shares in the company fell to the lowest level since June 2016 on Thursday after it warned of the impact on both revenue and profit from the outbreak.

WH Smith's airport and railway station stores have driven growth for the company by offsetting declining sales at its High Street stores.

Airlines globally have cancelled flights to and from China, where the outbreak originated, and more recently to the other regions such as Italy.

US President Donald Trump announced sweeping restrictions to travel from Europe to the United States on Wednesday.

WH Smith said airports in Asia Pacific, which account for about 5% of its travel division, had been significantly impacted since February.

Material Downturn

Over the last two weeks it has also seen a material downturn in passengers in Britain, the United States and Europe, it said.

"For UK Travel, we expect revenue for the six months (to end-August) to be down approximately 15% on expectations which include airports, our most affected channel, down 35% in March and April," the company said.

It said revenue in the United States and the rest of its international business was expected to be about 20% lower than expectations.

As a result it currently estimates an adverse impact on its top line of between £100 million and £130 million for the year to end-August and between £30 million and £40 million on underlying pretax profit.

The company said like-for-like revenue in the six months to end-February fell 1%, while total revenue rose 7%, and as a result it was confident profit for the first half would be in line with market expectations.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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