Shares soared in WH Smith on Wednesday even as it said it is heading for its worst month since at least September despite a strong Christmas period.
The business said sales so far in January have been 46% of the same period a year ago.
It is a major step down from last month, when the retailer outperformed expectations, notching up 67% of the sales it made in December 2019, and even higher in its high street stores.
Shares were up by around 9.5% just over an hour before markets closed in London.
“In our high street business, we worked hard to navigate our way through the evolving Covid restrictions as we approached the Christmas trading period,” said chief executive Carl Cowling.
“This positioned us well, resulting in a better than expected Christmas with sales in December at 92% of 2019 levels. Our online businesses continued to deliver significant year-on-year growth in the period.”
Mr Cowling was dealt a bloody nose by shareholders on Wednesday, as around a third voted against WH Smith’s remuneration report, mainly due to concerns over the chief executive’s £25,000 pay rise in a tough year.
January has proved trickier for many retailers as much of the UK remains under strict lockdown measures.
Both of the business’s main arms, its travel and high street stores, were badly hit across the month.
Travel has proven the more susceptible, and sales slumped to 30% of last year’s levels, but the figures had also been low in December.
“In our Travel business, we saw little change in the environment prior to the current lockdown, as expected, with sales in December at 36% of 2019 levels,” Mr Cowling said.
“In North America, we have seen a quicker recovery versus the rest of the world, given the higher volume of domestic travel.”
WH Smith said it had not experienced any disruption over the period due to the UK’s exit from the European Union. It does not expect Brexit to have a material impact on its ability to import stock in the coming year.
Julie Palmer, partner at Begbies Traynor, said: “The latest travel restrictions in response to the pandemic will have been unwelcome news for bosses at WH Smith, which relies heavily on the high footfall of train stations and airport terminals.
“This strategic decision seemed wise before the pandemic, but now it has a desperate need to find a cure for its over-reliance on these locations. And warnings of an upcoming recession will not help as getting consumers to part with their cash in the months ahead becomes more difficult.”