UK retailer WH Smith made its second major foray into US airports today with a $400m purchase of Marshall Retail Group, expanding in a fast-growing segment and sending its shares up 5%.
WH Smith was founded more than 200 years ago as a news vendor in London.
It has been rapidly opening shops at major airports across the world - including Dublin - to take advantage of an increase in passengers and boost profits soured by turmoil on British shopping streets.
The company now sells everything from books and sandwiches to Bluetooth headphones.
It has 433 shops at over 100 airports outside Britain and outgoing CEO Stephen Clarke told Reuters the retailer plans to open "hundreds and hundreds" more.
Carl Cowling, who takes over from Clarke in November, said the addition of Marshall will roughly double the size of WH Smith's international travel business.
The company took its first step into the US market last year when it bought digital accessories retailer InMotion.
Founded over 60 years ago in the gambling hub of Las Vegas, Marshall made a name for itself with souvenir shops in casinos and speciality retail outlets created for brands such as Lego and Harley Davidson.
But WH Smith is more interested in Marshall's 59 airport stores - located in the US and Vancouver - with 33 more expected to open by the end of 2024.
WH Smith said it would fund the all-cash deal for Marshall through a combination of £200m in new debt and a £155m equity raise. The company will suspend its share buyback programme while it pays off debt.
Profit from WH Smith's travel business, which includes shops at airports, railway stations and hospitals, jumped 14% to £114m in the fiscal year ended August 31, highlighting how important high-spending travellers have become to the company.
Overall, headline profit before tax rose to 7% to £155m, marginally beating analyst estimates of £154.2m pounds, according to IBES data from Refinitiv.
Profits from its high street business stagnated as the uncertainty around what terms Britain leaves the European Union, if does so at all, crimps British shopping sentiment.
WH Smith said it was prepared for Brexit and has put in place contingency plans, including increasing the stock of convenience products.
