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Peter Williams: “We want to provide a greater focus on our business in the run-up to the bigger integration with Aldeasa and World Duty Free” |
UK. Alpha Retail UK Limited today announced that it has sold its World News operation to WHSmith. The sale involves 23 stores at 11 airports.
WHSmith is one of the UK’s leading retail groups. It aims to be Britain’s most popular bookseller, stationer and newsagent. Since Italian catering-to-retail group Autogrill bought Alpha Airports Group (now Alpha Group) last year, Alpha CEO Peter Williams has been leading a review of the UK company’s operations. Autogrill also recently acquired the balance of Aldeasa to take full control of the Spanish travel retailer.
Further synergies are expected if Autogrill’s proposed acquisition of World Duty Free is cleared, as expected, by the European Commission, following a hearing scheduled for 16 May. Today’s announcement may have marginally assisted the chances of regulatory approval.
Peter Williams told The Moodie Report this morning: “As we prepare ourselves to integrate Alpha and World Duty Free, and you look at the whole retail proposition that Autogrill now has in the airports, you can’t do everything. You need to ensure you have a real focus.
“A lot of people have worked hard to create a business in World News, which is fantastic, but… WHSmith has a very prominent position in the CTN [confectionery, tobacco, newsagent] offer in airports so it’s quite hard in reality to compete. Quite frankly we have bigger things to look at in the tax and duty free side of the business and our flight catering. We felt that this strategically was a more logical home for the World News business.
“If you look at the retail business for us going forward, we really want to concentrate on those places where we have scale and differentiation. That would include the large tax and duty free stores, as well as the souvenir offer – not only [Alpha-run] Glorious Britain but also other group propositions in Spain [Aldeasa] and elsewhere. It’s really an opportunity to focus on those propositions that are going to yield the best results for us.
“We want to provide a greater focus on our business in the run-up to the bigger integration with Aldeasa and World Duty Free.”
Asked if the inflight business, particularly inflight catering – seen by many as a likely divestment – remained core to Alpha and Autogrill, Williams replied: “Yes it does. Absolutely. We are at the moment bidding for the British Airways [catering] contracts at Heathrow and Gatwick. We already do Gatwick and we’re putting up what we consider to be a pretty good offer to British Airways for the Heathrow business as well. We recently bought the flight catering business in Prague and our business in Australia is doing very well, where we are working with Emirates as a shareholder. Actually the flight catering business is doing well.”
Last week Alpha announced a major restructuring of its retail buying and merchandising teams in the UK, involving the loss of 20 to 30 positions.
Earlier today in an Alpha statement, Williams commented: “The sale of World News to WHSmith is part of Alpha’s ongoing strategic review of the business which is designed to ensure that we concentrate on our strengths and maximise all opportunities.
“Over many years operating within the CTN sector we have built a significant business supported by great people and established strong relationships with our airport partners of which we are all very proud. We are sure that WHSmith, who is the market leader in the sector, is the right home for the World News business and its staff. This sale is a step forward for Alpha as it allows us to concentrate on our core retail and flight businesses.”
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World News (pictured at Birmingham Airport, UK) has proved to be a highly successful specialist concept for Alpha but the group, under Autogrill ownership, is now focusing solely on nominated core businesses | |
In related news WHSmith today announced a +8% rise in pre-tax profits to £64 million (US$126 million) for the six months ended 29 February 2008. Group sales rose +2% though like-for-like revenues were down -2%, reflecting a decision to rebalance the High Street mix towards core categories.
Profits from trading operations for travel-related operations reached £17million (US$33.5 million), with sales up by +14% year-on-year. Like-for-like sales in the sector rose just +1% (though excluding tobacco the growth was +3% on a like-for-like basis).
WHSmith Chief Executive Kate Swann said: “We have delivered another period of good profit growth, with Group profits up +8%. We have seen further strong performance from Travel with substantial progress in new business development in the hospital, air and motorway channels. In the High Street, we successfully continue to deliver our strategy to rebuild our authority in our core categories.
“The economic environment remains uncertain and, whilst we continue to be cautious, we are confident in the outcome for the full year.”
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