WH Smith's CEO, Carl Cowling, suggests that President Trump's tariff policies are more likely to decrease prices than increase inflation for UK retailers as East Asian suppliers explore alternatives to the US market. While many economists, including those from the Organisation for Economic Co-operation and Development (OECD), have posited that increased trade barriers could lead to global inflationary pressures, Cowling stated that there is no logical reason for inflation to occur. He believes that the market will adjust, potentially leading to a surplus of stock and, consequently, lower prices in the UK. Cowling added that the company has not experienced any disruptions to deliveries from overseas suppliers due to the evolving tariff situation. He noted that WH Smith is unlikely to see immediate changes in sourcing or pricing since the group's stock orders are secured until after Christmas. According to Cowling, trading in the UK remains "pretty robust," with airline passenger bookings showing a slight year-on-year increase for the summer and no recent decline in numbers, despite concerns about consumer confidence. He emphasized the need for retailers to remain adaptable in response to the volatile changes in the trading landscape as the US modifies its tariff policies with China and other countries. Cowling mentioned that WH Smith's US business, which operates 258 stores in airports (primarily handling domestic flights), sources most of its food and snacks locally. However, suppliers of other products, such as headphones and charging cables, are likely based in Asian countries, including China, which are subject to high import tariffs. Cowling anticipates that these suppliers of electronics and other goods may shift production from China to countries like Vietnam or the Philippines, where tariffs are lower. He stated that WH Smith is closely monitoring the situation but does not expect to be as significantly impacted as other retailers, such as those in the fashion industry. These remarks followed WH Smith's announcement of a nearly one-third decrease in profits in its high street business, with sales declining by 7% before its sale to Hobbycraft owner Modella. Last month, the group agreed to sell its 480 high street stores to concentrate on its travel business in railway stations, airports, and hospitals, amidst increasing costs and declining visitor numbers in traditional retail locations. The deal is expected to be finalized this summer. WH Smith's high street profits dropped by £7 million to £15 million, with sales falling to £239 million in the six months leading up to the end of February. However, the company reported that the broader group is on track to meet full-year profit expectations, as its travel business, operating stores in 32 countries, saw a better-than-expected 6% increase in sales to £712 million, and a 12% rise in profits to £56 million. Total group sales increased by 3% to £951 million in the first half of the year, but the company reported a pre-tax loss of £25 million after exceptional items of £70 million, including impairment charges. WH Smith has agreements in place to open over 90 new stores, with more than 70 in North America. The company plans to open over 60 travel stores worldwide this financial year. Cowling noted that the North American business is benefiting from improvements in its stores and product range, stating that they continue to secure new space and have recently been awarded a significant contract at a major east coast airport. He concluded that the second half of the financial year has started positively, and the company remains on track to deliver full-year results in line with market expectations. Despite being aware of the increased geopolitical and economic uncertainty, Cowling believes that the resilient nature of their business positions them well to capitalize on growth opportunities in global travel retail.
