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WH Smith performs better than expected amid lockdown

Pedestrians wearing a face mask or covering due to the COVID-19 pandemic, walk past a WH Smith store in London on August 5, 2020, following the announcement the retailer could cut 1500 jobs, and close up to 14 stores. - WH Smith said on Wednesday that it is planning to cut up to 1,500 jobs, due to the slow recovery from the COVID-19 lockdown. (Photo by Tolga Akmen / AFP) (Photo by TOLGA AKMEN/AFP via Getty Images)
WH SMith saw significant growth its online businesses with its online greeting cards business, funkypigeon.com, experiencing record sales for the Valentine’s day period. Photo: TOLGA AKMEN/AFP via Getty Images 

WH Smith (SMWH.L) says it has performed better than expected amid widespread coronavirus lockdowns throughout last year.

In a company trading update on Tuesday morning it said it had “adapted well to the evolving trading environment on the high street” amid the pandemic, which led to reduced footfall to brick and mortar shops, as it reduced its monthly cash burn forecasts.

The stationery stalwart said revenue in its high street business in January 2021 was at 74% of 2019 levels and 84% of 2019 levels in February 2021, ahead of expectations.

It also saw significant growth its online businesses with its online greeting cards business, funkypigeon.com, experiencing record sales for the Valentine’s day period.

Meanwhile, the group has extended the maturity of its two existing £200m ($278m) term loans to October 2023 and agreed a new minimum liquidity covenant for both the August 2021 and February 2022 covenant tests.

its £200m revolving credit facility remains unchanged with the current arrangement due for renewal in December 2023.

READ MORE: Lockdown roadmap and Valentine’s Day lift UK spending in February

As at 28 February 2021, the group had cash on deposit of £52m with £50m of known commitments (rents, restructuring charges and outstanding creditors) and access to £200m of committed facilities.

The business reported in January that it was cash positive in November and December 2020.

“As a result of our better than anticipated trading performance since the start of January 2021, our cash burn has improved. We now expect the monthly cash burn over the period January to March 2021 to be approximately £12m-£17m versus the previously guided £15m-£20m per month,” WH Smith said.

The group will announce its interim results on 29 April.

Consumer spending data presented a mixed picture in February as both prolonged lockdowns and hopes of reopening the economy drove spending.

According to the British Retail Consortium and KPMG’s retail sales monitor, on a total basis, sales increased by 1% in February, against a growth of 0.1% in February 2020. This was above three-month average growth of 0.6% and the 12-month average decline of 0.3%.

Showing momentum, UK retail sales increased 9.5% on a like-for-like basis from February 2020, when they had decreased 0.4% from the preceding year.

Barclaycard figures show that as much of the high-street remained closed, spending on non-essential items declined 22.1% year-on-year.

Watch: Top tips for helping the environment on a tight budget

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