WH Smith soars on US sell-off

SHARES in books and newsagents group WH Smith jumped more than 5% in early trade on news that it has finally sold its lossmaking US hotel and airport shops operations.

The $78.5m (£49m) sell-off, which follows a profit warning a few weeks ago, resolves a major problem for incoming chief executive, Kate Swann. She is still working her notice at Argos but is expected to move in to replace Richard Handover by the end of the year.

Handover said the disposals would be 'significantly earnings enhancing'. Its shares rose 19 1/2p to 377p, but later narrowed that gain, trading ahead 9 1/2p to 365p. Smith hit a year's high of 409p in July.

Smith has already written down more than £60m on the US businesses. The cost of closing the head office in Atlanta will be £7m but will save administration costs of £20m a year.

The airport outlets are being sold to Hudson Group for £41m, paid in a cash and loan notes mix. The management team is buying the hotel business in an £8m loan note deal.

The businesses had been profitable for 16 years. But they were hard hit by the US economic downturn and the fall-off in travel following 9/11. The disposals mean Smith will no longer have a presence across the Atlantic although it will operate airport shops in other parts of the world.