If you can’t beat them join them, or so they say; but Smiths took the opposite approach in the Christmas period, and suffered a big drop in sales, but maybe profits, on the other hand, will be stronger.
While HMV subsidiary Waterstones discounted and discounted some more, WH Smiths was more cautious.
As the retailer’s Chief Executive Kate Swann said yesterday: ” We actively chose not to discount to profit-destroying levels.” She said that in the run up to Christmas, competitors started discounting top sellers, selling them at a loss, as a way of steering customers into the stores, and out of panic they were going to be left with too much stock.
Smiths on the other hand discounted but not to a level which was below cost price. As Ms Swann said: “It is not sensible business.”
As a result, like for likes in the seven weeks to January 21 were down 5%.
Smiths is in the midst of a five year plan to focus more on high margin products, such as stationery.
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