WH Smith issues profit warning as jet fuel crisis looms | Money News

WH Smith has issued a profit warning and suspended shareholder payouts as the travel-focused retailer grapples growing travel disruption caused by the Middle East crisis.

The company, which sold off its UK high street business last summer, took the decisions as a growing number of airlines cancel flights to save jet fuel as stocks across Asia and Europe suffer from the closure of the Strait of Hormuz.

Flights across the Middle East were worst hit as the US-Iran war gathered intensity last month, with Tehran later targeting its Gulf neighbours’ energy infrastructure.

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While a US ceasefire is currently largely holding, the global economy is still being held hostage by the lack of oil and gas flows through the strait.

WH Smith said on Thursday: “In light of the uncertainty arising from the conflict in the ​Middle East, the group is ⁠taking a more cautious ⁠outlook reflecting the impact on passenger numbers and weaker consumer confidence”.

Shares fell by up to 17% in early trading.

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The company said it now expected its headline pre-tax profit measure, covering the 12 months to the end of August, to come in between £90m-£105m.

That was down from an earlier range of £100m-£115m.

WH Smith suspended its dividend in order to strengthen its financial position, anticipating growing disruption ahead.

The European Union was the latest to warn of the risk to summer holidays from flight cancellations caused by jet fuel shortages.

Lufthansa has cancelled 20,000 flights while a growing number of airlines are restricting the frequency of some services.

WH Smith, which operates around 1,200 stores worldwide, said it did ‌not expect any immediate recovery in consumer spending and passenger numbers.

Its update this morning meant it joined a growing number of major retailers in warning over the outlook, given the growing squeeze on consumer budgets from higher prices caused by the war.

Just this week, the consumer goods producer Reckitt Benckiser flagged raised fears of up to £150m of additional energy costs while Sainsbury’s joined Tesco in pledging to keep prices as low as possible during the crisis as production and transportation costs rise.