WH Smith has slashed its full-year profit forecast and halted shareholder dividend payments as the conflict with Iran disrupts global air travel. The retailer, which operates around 1,300 shops in airports and train stations worldwide, saw its shares tumble more than 10% in morning trading on Thursday after announcing that full-year profits are now expected to range between £90 million and £105 million.
This revised forecast marks a decline from the £108 million recorded in the year to last August and falls short of the previous guidance of £100 million to £115 million for the 2025-26 financial year. In response to the mounting uncertainty, WH Smith has decided to suspend its dividend in a bid to strengthen its balance sheet.
The company stated: “In light of the uncertainty arising from the conflict in the Middle East, the group is taking a more cautious outlook reflecting the impact on passenger numbers and weaker consumer confidence. Much will depend on the peak summer trading period and the group assumes no immediate improvement in consumer confidence and assumes that jet fuel supplies can be maintained.”
Interim results revealed that like-for-like UK revenues remained flat in the first seven weeks of the second half due to reduced passenger numbers amid the Iran war disruption. Group-wide revenues edged up by only 2% during the period.
The current disruption follows a challenging year for WH Smith, which included a significant accounting error in its US division. This mistake led to a steep decline in share prices, the departure of former chief executive Carl Cowling, and an investigation by the Financial Conduct Authority (FCA). An independent review by Deloitte uncovered several “shortcomings” in which the group overstated profits in the US business by as much as £50 million due to audit process issues.
Leo Quinn, former boss of infrastructure giant Balfour Beatty, was appointed executive chairman on April 7 to lead the business. Presenting the half-year results, he said: “The immediate focus is to restore confidence and ensure the right foundations are in place to support profitable growth and long-term value creation. Moving forward, the board and management team will have a relentless focus on driving cash, cost discipline and strengthening the balance sheet. As a first step, the board has taken the prudent decision to suspend the dividend.”
For the first half of the year, WH Smith’s underlying pre-tax profits plummeted to £3 million for the six months ending February 28, compared to £21 million in the same period last year. On a statutory basis, the company recorded an interim pre-tax loss of £25 million, a stark contrast to the £1 million profit reported a year ago.
