Kate Swann, the chief executive of WH Smith, laid out a back-to-basics recovery strategy for the high street bookseller yesterday, after venture capital group Permira dropped its takeover plans.
WH Smith hopes to regain its position as "Britain's most popular stationer, bookseller and newsagent", by improving its range and practising what its chief executive called "basic retail discipline".
About 70% of Britain's adults had passed through WH Smith's doors at least once in the past 12 months, according to its research, but too many of them went away empty-handed. "We get lots and lots of customer traffic. What we have got to do is persuade them to buy something," said Ms Swann.
To encourage them, the retailer said it would stop selling CD singles to focus on top-selling albums, increase its range of popular DVDs, and more than double the number of greetings cards available in each store, from 1,400 to 3,500. Ms Swann said it would also hone its books range, to concentrate on bestsellers.
WH Smith said it would also take action to plug the pension fund black hole, thought to be about £250m, which scuppered Permira's takeover plans last week. The retailer will take out a £120m bank loan to fund an upfront payment to wards narrowing the deficit. That will allow it to slash annual payments into the fund in half, from £42m to £21m.
Plans to sell or demerge Hodder Headline, WH Smith's publishing arm, are also on schedule to be completed by the end of the year, Ms Swann said. WH Smith is already in talks with several potential bidders, and promised yesterday to return all the proceeds to shareholders if a buyer is found. Analysts think it could fetch £200m-£250m.
WH Smith also announced a new share-based incentive scheme for its 40 most senior managers. They will be encouraged to invest in the company, and offered matching share options if performance conditions are fulfilled. Ms Swann said she would be investing "a large proportion of my meagre fortune" in WH Smith shares, and said it was a way of aligning the interests of managers and shareholders.
"We believe firmly that this business is capable of recovery, and we'll put our money where our mouth is." The scheme will have to be agreed by shareholders at an extraordinary meeting. The shares closed up 2.5p at 289p yesterday but were around 350p in June when it was thought Permira's bid would succeed.
Ms Swann said the end of Permira's long-running interest in the company should help to speed up the appointment of a new chairman.
