WH Smith’s Core Profit Falls 30% to £76 Million in 2026
Key Facts
WH Smith said on Nov. 12 that the group’s core profit before tax and non-underlying items was £76 million for the year ended Aug. 31, 2026, compared with £108 million in 2025. The company said in its preliminary results announcement that the figure was in line with its guidance. Core profit fell alongside revenue growth, reflecting pressure on trading profitability during the year. Group revenue rose 5% to £1,625 million, from £1,553 million, while like-for-like sales increased 2%. Shares fell 7.5% in early trading on the day of the announcement, according to Investing.com coverage.
At the trading level, core profit fell to £130 million from £159 million, and the trading margin narrowed to 8% from 10%. The company attributed the pressure to the renewal of UK airport contracts in a competitive environment, alongside inflation and challenging economic trading conditions. In the UK, trading profit fell £23 million to £107 million. The company said this reflected higher rents on airport contracts, difficult economic conditions and increased promotions in the second half. It also cited a decline in brand marketing income and supplier revenue, both of which added pressure to UK market performance.
On a basic diluted earnings-per-share basis, earnings fell to 30.3 pence in 2026 from 43.4 pence in the previous year, a decline of 30.2%. Under International Financial Reporting Standards, the group recorded a loss before tax of £107 million, compared with a profit of £2 million in 2025. This distinguishes the accounting loss reported under international standards from the core profit, which excludes non-underlying items.
Free cash flow fell to £52 million from £63 million in the previous year. By contrast, the annual results showed an improvement in core net debt from £390 million in August 2025, after it had reached £496 million at the end of February 2026. Leverage had risen to 2.9 times in February, from 2.1 times in August 2025. In its first-half results, core profit before tax and non-underlying items fell to £3 million from £21 million in the corresponding period. The company then recorded an IFRS loss before tax of £25 million, compared with £4 million in the first half of 2025.
WH Smith cut its forecast for core profit in fiscal 2026 in April to a range of between £90 million and £105 million. At the time, it cited uncertainty related to the Middle East conflict and its potential impact on passenger numbers and consumer confidence. In a September pre-close trading update, the company forecast annual profit of about £75 million and said margins had been affected by heavy discounting, lower brand marketing and inflation. The final figure of £76 million was close to the September forecast and below the range the company announced in April. These milestones place the decline in profitability within a pattern of forecast reductions during the year, despite continued annual revenue growth.
In the first ten weeks of the new financial year through Nov. 7, like-for-like sales were flat, while total constant-currency revenue rose 1%, in line with expectations. The company expects core profit before tax of between £75 million and £85 million in the 12 months to August 2027, and capital expenditure of about £85 million during the financial year ending in 2027. Executive Chairman Leo Quinn said the new approach focuses on cash, cost and profitable growth. The company also expects the costs of its transformation programme to be completed in fiscal 2027/28, with its benefits continuing to build over the medium to long term. This follows a year marked by a narrowing trading margin and lower profit, while the new period begins with flat like-for-like sales.