WH Smith (SMWH) £19.60

Loss to date: -3%

Original entry point: Buy at £20.20, 14 June 2018

The retailer is to pay £155m to buy US airport chain InMotion, propelling the size of its travel arm and further reducing its reliance on the UK high street. It also provides a platform from which to expand across the US which is the world’s largest travel retail market.

Strategically this acquisition is very good as the travel arm is the main growth driver for group earnings. The market is clearly pleased, given how its share price has rocketed by 15% since the deal was announced on 31 October 2018.

It is worth putting that movement in some wider context as WH Smith’s share price had taken a beating earlier in the same month when full year results (11 Oct) showed a 4% decline in full-year pre-tax profit.

Excluding any future contribution from InMotion, WH Smith’s travel arm accounts for over half of group sales and two thirds of its profit. The travel division grew trading profit in the year to 31 August by 7% versus a 3% decline from its high street operations.

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