WH Smith shares rise 4% as travel division powers ahead in Q3

Shares in WH Smith PLC (LSE:SMWH) rose 4% on Wednesday after the retailer delivered a reassuring third-quarter update and said the sale of its High Street business remains on track to complete by the end of June.

Group revenue rose 5% year on year in the 13 weeks to 1 June, or 7% at constant currency, driven by continued strength across its international travel operations.

Sales in UK travel hubs rose 5%, while the United States and the rest of the world grew 3% and 9% respectively.

Analysts at Shore Capital welcomed the update, noting that the disposal of the High Street arm would result in a leaner and more profitable group, one that benefits from long-term structural growth in global travel rather than the declining UK retail environment.

They also praised management’s increased focus on cash discipline and cost control, which they expect will help support margins in a mixed macroeconomic backdrop.

Peel Hunt echoed the broadly positive tone, describing the trading update as a “steady as she goes” performance.

While passenger volumes were slightly lower in the US, like-for-like sales there rose 2%, helped by a continued rise in average transaction values.

Trading in the UK was marginally softer, but Peel Hunt stressed that these were minor changes and maintained its “add” recommendation with a 1,400p target price.

The broker added that WH Smith’s business model remains attractive, underpinned by a strong presence in airports and railway stations globally.

While the current update may not trigger upgrades to forecasts, Peel Hunt believes the foundation is in place for upward momentum when external conditions improve.

Shares in the retailer are currently trading at 11.2 times forward earnings and 8.2 times EBITDA for calendar year 2026, valuations that Shore said are broadly in line with peers.

But with the High Street exit removing a drag on performance, analysts believe there is room for the stock to command a premium multiple over time.

The stock rose 38p to 1,062p.