WH Smith has issued a profit warning after a drop in customer numbers at its US airport stores linked to the Middle East conflict. The retailer, which runs 1,200 outlets in airports, railway stations and hospitals worldwide, also said it would raise about £100m to bolster its finances, reduce debt, fund technology upgrades and close underperforming locations following weaker trading. The company noted that its UK airport sales had already declined due to the regional conflict and that North American operations were now affected too, with airport revenues down 2% year on year in the seven weeks to 6 June. It now expects pre-tax profits of £75m to £90m for the year, compared with earlier forecasts of £90m to £105m. The firm cited lower passenger numbers, softer consumer demand, reduced marketing, higher promotions and inflation pressures. It assumes no quick recovery in spending and stable jet fuel supplies. UK airport revenues were flat in the period while group-wide sales rose 1%. WH Smith intends to raise the funds through the issue of roughly 26m new shares. Its shares dropped 16% on Wednesday to 413p, the lowest since 2010. The company will also record a £150m non-cash impairment charge and close some European and North American resort stores. Executive chair Leo Quinn outlined a programme to exit or renegotiate loss-making sites and switch some operations to franchises. The group continues to face the effects of an earlier accounting issue at its North American business that overstated profits by up to £50m. UK regulators are examining the audit and related conduct. Analyst Richard Hunter described the update as a broad reset that will test investor confidence further.
