Shares in WH Smith fell by almost 7% earlier today as the travel retailer saw its profit before tax drop by almost 30% to £76m in the year to 31 August.

The firm said this figure was in line with company guidance, following the impact of UK contract renewal, inflation and macro headwinds.

WH Smith reported that its total group revenue increased by 5% in this period to £1.62bn, while like-for-like sales grew by 2%.

Across its regions, the retailer reported that UK revenue was up 4%, while North America and Rest of World and other jumped by 9% and 1% respectively.

Its free cash flow fell by 17% to £52m, although this was supported by structural working capital improvements.

Executive chair, Leo Quinn, said: "This last year, we have commenced a fundamental reset of the Group. The capital raise supported by our shareholders strengthened the balance sheet. It also enabled us to launch a self-help programme focused on restructuring the cost base, improving cash generation and accelerating our store portfolio rationalisation to eliminate loss-making investments. Going forward, our decisions and capital allocation will be aligned with a rigorous assessment of returns.

"In parallel, we are working to provide the Group with a foundation for sustainable, profitable growth, including investing in robust systems and governance processes to support successful execution. As we accelerate the pace, this must go hand in hand with building a high-performing retail culture that gives our people the confidence and accountability to make faster decisions and drive value."

In its outlook, WH Smith has said that its first 10 weeks' trading in the current financial year is flat on a like-for-like basis, reflecting ongoing consumer and macroeconomic pressures.

It added that it continues to plan cautiously and therefore expects its headline group profit before tax and non-underlying items for the 12 months to be in line with market expectations of between £75m and £85m.

Investment director at AJ Bell, Russ Mould, said that Quinn’s job is not getting any easier.

He concluded: "Quinn came in to turn things round after an extremely tricky period for the business. Having sold off its legacy high street business in June last year, WH Smith was supposed to be forging ahead as a travel-focused retailer benefiting from the captive audience to be found in major transport hubs.

"However, an accounting scandal in its North American business, which emerged just a few months after the demerger, and the worsening geopolitical climate and surging fuel prices which have hit demand have combined to shatter sentiment towards the group.

"Rebuilding it is not likely to be the work of just one or two reporting periods and while cash generation remains positive it did fall year-on-year. Improving cash flow will be crucial in restoring the credibility of the business with the market."

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