Fashion chain Coast collapses into administration with 300 jobs at risk in another blow for the High Street as WH Smith closes six stores
- Retailer WH Smith launches overhaul of under-pressure high street business
- It will shut six stores and wind down trials at Cardmarket and WH Smith Local
- WH Smith has 839 travel outlets and 610 high street stores across the UK
- It said move was designed to ‘better structure the business for the future’
Fashion chain Coast has collapsed into administration, putting 300 jobs at risk just hours after WH Smith launched an overhaul of its under-pressure business as it revealed sliding sales and profits at the division.
The group said it has kicked off a detailed review of the high street business which will see it close six stores and wind down trials such as its 20-strong Cardmarket chain and franchised convenience store arm WH Smith Local.
WH Smith – which has 839 travel outlets and 607 high street stores in the UK – said the move was designed to ‘better structure the business for the future’.
WH Smith has 839 travel outlets and 610 high street stores across Britain. A branch is pictured
It will also see a restructure of some operational activities and a renewed focus on core ranges.
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One-off costs of the review sent group pre-tax profits down 4 per cent to £134 million for the year to August 31.
What high street retailers have closed shops in 2018?
Carpetright: The carpet retailer is closing 92 stores across the UK. These closures represent nearly a quarter of all UK Carpetright stores.
Toys R’ Us: The UK’s largest toy shop went into administration in February 201, leading to an estimated 2,000 redundancies.
House of Fraser: The department store chain was on the verge of heading into administration but was rescued at the eleventh hour by Sports Direct owner Mike Ashley.
Maplin: The electronics giant has gone bust, closing shops across the country and putting thousands of jobs at risk.
Mothercare: The baby and toddler chain is closing 60 shops across the UK putting up to 900 jobs at risk.
Poundworld: Poundworld announced it was going into administration on June 11 after talks with potential buyer R Capital broke down, putting 5,100 jobs at risk.
Homebase: The DIY chain is closing 42 stores, putting up to 1,500 jobs at risk
Shares tumbled as much as 12 per cent after the results, with the stock also under pressure amid a wider market sell-off.
But with these costs stripped out, underlying pre-tax profits rose 4 per cent to £145 million.
WH Smith saw trading profits in its high street stores fall 3 per cent to £60million, but this was offset by a 7 per cent rise in profits at its travel arm to £103million.
The group said high street like-for-like sales dropped 3 per cent, although it said the ‘slime’ craze helped drive an ‘encouraging’ performance in the final six months.
Sales rose 3 per cent across its outlets based in airports and train stations.
Stephen Clarke, group chief executive of WH Smith, said: ‘We had a good year in high street despite the well-documented challenges of the UK high street.
‘During an encouraging second half, the business traded well and we quickly identified the latest trend in the market, becoming a one-stop-shop for all slime-related products.
‘Despite this good performance, we are not ignoring the broader challenges on the UK high street and, during the second half, we conducted a business review to ensure our high street business is fit for purpose now and for the future.’
Under the restructure, WH Smith plans to close the 20 Cardmarket stores as their leases come to an end, with affected staff transferring to nearby WH Smith stores.
The WH Smith Local franchises – which are run as concessions within independent newsagents and convenience stores – will be wound down as contracts come to an end.
It also plans to keep slashing costs to shore up profits, having delivered savings of £12million over the past financial year, with another £9million earmarked for 2018-19.
WH Smith said in its full-year results that, despite falling, its high street trading profit was the third highest reported in the last 15 years.
It said profits in the second half were up £1million on a year earlier, while the decline in like-for-like sales also eased to 2 per cent.
George Salmon, an equity analyst at Hargreaves Lansdown, said: ‘WH Smith is a rare beast among the UK high street names in that it’s delivering continued underlying profit growth.
The death of the High Street in Britain?
Thousands of shops are closing across Britain as record numbers of customers buy on the internet.
A total of 1,772 stores disappeared from the UK’s busiest town centres last year – meaning almost five closed every day.
Foreign internet rivals such as Amazon are taking their business, with 18.2p of every pound forked out by shoppers now spent online.
A string of retailers have recently gone bust or are facing an uncertain future. More than 50,000 retail jobs have already been lost this year.
This is likely because in 2008, just 4.9 per cent of shopping was done online, but last August the figure was a record 18.2 per cent.
‘But that performance masks the fact Smith’s High Street division is facing some pretty tough challenges.’
RBC analyst Richard Chamberlain said WH Smith’s shares would receive a boost if the firm split its travel and high street businesses.
Begbies Traynor partner Julie Palmer said the firm could ‘weight its efforts towards its travel arm, creating more commuter and traveller friendly products and buying up space in locations that fit a similar criteria.’
‘WH Smith is a fine example of how going online isn’t the only solution for traditional retailers as its travel arm enjoys growth while focus shifts from its high street,’ she said.
A WH Smith spokesman told MailOnline today: ‘Over the year, WHSmith will be opening more stores than it is closing.
‘Across the business we will continue to create jobs, employing more people next year than this year.
‘We are not announcing the six stores we have earmarked for closure in today’s statement as they will close at different times as and when their leases expire – the earliest of these will be in 2021.’
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