WH Smith has revised down its full-year performance outlook and initiated a capital raising effort.
Due to the uncertain situation in the Middle East and weaker operational performance in its North American division, WH Smith has lowered its financial guidance for the fiscal year ending August 31.
The retailer's shares plunged 15.73%, hitting a 16-year low. The company cited operational pressures from the Middle East conflict as the reason for the downgrade and announced a £106 million (approximately $141.8 million) equity financing to strengthen its balance sheet.
In European afternoon trading, the stock was down 74.6 pence, a 15% drop, to 417.6 pence, having earlier fallen to a low of 394.8 pence. The stock has declined 35% year-to-date.
The company, a constituent of the FTSE 250 index and a retailer of books, magazines, and snacks in airports, train stations, and hospitals, announced on Wednesday the placement of 25 million ordinary shares at 410 pence per share. This price represents a 17% discount to Tuesday's closing price of 492.2 pence.
Earlier on Wednesday, the company had disclosed plans to place up to 26 million ordinary shares via a bookbuild process.
WH Smith stated it would also conduct a retail offer of 244,000 shares at the same price and issue 514,631 shares to several directors, including Chairman Leo Quinn and Chief Financial Officer Max Izzard.
Concurrently, citing ongoing uncertainty in the Middle East and a significant recent weakening in North American performance, the company downgraded its full-year expectations for the period ending August 31.
Previously, in its half-year report on April 23, the company had forecast adjusted pre-tax profit in the range of £90 million to £105 million. The new guidance has been lowered to a range of £75 million to £90 million.
For the seven weeks to June 6, group like-for-like revenue increased by 1% year-on-year. However, North American revenue fell by 4%, compared to a 2% growth in the first seven weeks of the second half, which began on February 28.
The company attributed a 2% decline in like-for-like revenue at North American airport stores to the Middle East conflict, which has increased airfares, reduced airline capacity, and led to lower passenger numbers.
The company judged that consumer confidence is unlikely to recover in the short term and noted that a significant portion of its annual revenue is concentrated in the fourth fiscal quarter.
Its previous forecast for full-year North American revenue growth of 6% to 8% has been revised down to a range of 4% to 6%.
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