WH Smith may cut up to 1,500 jobs as virus triggers restructuring

FILE PHOTO: A company logo is pictured outside a branch of WH Smith in Manchester northern England, March 17, 2016. REUTERS/Phil Noble

(Reuters) - British retailer WH Smith SMWH.L said on Wednesday it could cut up to 1,500 jobs as part of a restructuring of its UK store operations, due to significantly fewer customers at its travel and high street shops despite easing coronavirus restrictions.

Founded more than 200 years ago as a news vendor in London, WH Smith expanded at a host of major airports to take advantage of rising passenger numbers, helping offset the decline of the British high street.

The company said 53% of its UK travel store estate is open with a focus on increasing average transaction value now that sales have started to recover compared to the lockdown period.

Shares in the company jumped to session highs following the announcement and by 1020 GMT were up 2.7% at 1,010.3 pence.

“In our travel business, while we are beginning to see early signs of recovery in some of our markets, the speed of recovery continues to be slow, Chief Executive Officer Carl Cowling said, adding that low footfall was also hampering progress on the high street.

Revenue plunged 57% in July compared to a year earlier, a smaller drop than in the three consecutive months before it.

Cash burn on an underlying basis was between 15 million and 20 million pounds ($19.69 mln-$26.25 mln) in July and the company said it has enough funds to operate throughout a prolonged downturn in its markets.

It expects costs associated with restructuring to be around 15 million to 19 million pounds and to deliver a headline pretax loss of between 70 million and 75 million pounds for the year ending Aug. 31, compared with a headline pretax profit of 155 million pounds last year.

Reporting by Tanishaa Nadkar in Bengaluru; Editing by Aditya Soni and Rashmi Aich; Editing by Kirsten Donovan