WH Smith (LON: SMWH) shares are down 6% today. SMWH shares are this much down on the back of the publication of the end of year trading statement. We’ll see the full results when they’re audited and so on. It might seem more than a little unfair that sales are nicely up yet the shares are down but there are a couple of reasons this could be so.
The most obvious is simply that old one about rumours and facts on stock markets. Hops about what might happen tend to get built into share prices - that’s the rumours part. Reality, when it arrives, is very rarely as exciting as people were dreaming it would be - that’s the facts part. So, buy on the rumours, sell on the facts. It’s not a perfect mantra, not at all, but it does explain quite a lot. We expect there to be decent results, some think they’ll be more decent than they are, hopes are a little disappointed.
It’s also true that we’ve known that travel is recovering. We can see that from other information sources. So, given that WH Smith’s is now a travel retailer, we know that footfall is increasing. We know that at least potential custom is increasing, we’re only looking for how well they convert that. So a lot of the increase in sales really was already built in.
WH Smith share price from Google Finance
As we’ve said before about WH Smith: “Well, it is true that passenger numbers are back up. But the blend of them has changed. The short haul and leisure airlines are as full as they ever were - the long haul business traffic seems not to have come roaring back. Zoom’s taking the place of some of that.
Much the same is true on the railways. Work from Home is really rather killing commuter traffic - season tickers are down at least 20% on some lines. But leisure travel has risen strongly. So much so that one rail operating company now schedules maintenance for Fridays rather than weekends because that’s when the traffic is the least.
OK, so footfall is back up then. But the passenger mix has changed rather a lot. At which point, well, who does WH Smith make more money off? The regular commuter with ingrained habits? Or the leisure traveller stocking up for a treat of a ride? This isn’t one of these things it’s possible to work out entirely by logic, We can have views, of course we can, but proof is really only going to come from the results themselves.”
We don’t know that from these scanty results. It might well be possible to work out more about it from the full results when they arrive.