WH Smith: Kate Swann turns £135m losses into £106m profit in a decade

http://www.guardian.co.uk/business/blog/2013/jan/23/wh-smith-kate-swann-profit

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When Kate Swann arrived at WH Smith in 2003, there was a widely held view that the chain's days were numbered.

A decade on, she has turned losses of £135m into a profit of probably £106m this year, and shares that were languishing at 250p are now changing hands at 650p. Swann is now one of the UK's most highly regarded – and highly paid – retailers.

Yet she has achieved this remarkable feat by breaking many of the "rules" of running a successful high street retail business. When Swann announced she was pulling out of selling music and DVDs because the profit margins were thin and getting thinner, rivals thought she had taken leave of her senses – she was instantly kissing goodbye to about 30% of Smith's turnover. On a same-store basis on the high street, WHS now sells roughly £65 of goods for every £100 of custom seven years ago.

The demise of Zavvi and HMV in the face of online competition shows it was a brave – and correct – decision.

Swann favours the old retail adage: sales are vanity, profits are sanity. By focusing on profitable sales and cutting costs relentlessly, she has boosted profit margins – according to analyst Nick Bubb by an almost incredible 15 percentage points.

While other retailers have been pouring resources into the digital world, Smith's big online strategy is its Funky Pigeon card site. Instead, Swann plans to open more shops, even though they are, to be frank, deeply unpleasant places to shop, stuffed with stock and screaming promotional banners.

While the supermarkets have to tread carefully in the products they offer and have been targeted for displaying sweets at the checkout, Smith's has sold stationery aimed at teenagers and young women adorned with the Playboy bunny motif and Swann's checkout assistants attempt to force-feed the nation giant bars of Galaxy and chocolate oranges.

Her secret? Maybe it's the low profile. While many rivals enjoy the limelight, holding forth on the woes of the economy, the lack of women in the boardroom and political issues such as the in-out debate, Swann says nothing. She doesn't give interviews. On Wednesday, at Smith's AGM, a shareholder stood to offer thanks for her transformation. Asked to respond, she merely said: "Thank you, let's move on."

No doubt she will. There will be a queue for her services.