WH Smith wants to fill the void left by the collapse of HMV in entertainment retailing

WH Smith, the books retailer, is planning to stock up CDs and DVDs again, following the collapse of HMV, which has left a void in the music retail market. The move comes in sharp contrast to CEO Kate Swann’s strategy over the past few years under which WH Smith cut down on its entertainment offerings. The stationery chain is believed to be considering the reintroduction of CDs and DVDs on a store-by-store basis.

After the closure of 107 HMV sites, demand for the movie rentals since Christmas has made WH Smith retreat on its original plan and has now begun to re-stock CDs and DVD products in a handful of stores. WH Smith site at London Victoria railway station, one of the company’s most profitable locations, will house CDs and DVDs from now on.

Kate Swann pulled WH Smith out of the entertainment market because it is low margin and highly competitive due to the rise of online rivals. Her decisions at WH Smith have helped the retailer to emerge as one of the most resilient businesses on the high street, despite sales falling sharply. In the 20 weeks to January 20, WH Smith reported a 5% drop in like-for-like high street sales and a 4% decline in its travel stores at airports, railway stations and service stations. Sales from CDs and DVDs now account for a low single digit percentage of WH Smith’s sales, compared to a quarter when Kate Swann took over.

WH Smith’s re-entry into entertainment business comes at a time when Kate Swann is due to step down as the chief executive this summer after 10 years in the role. She has driven annual profits to more than £100m by cutting costs and focusing WH Smith on higher margin sectors such as stationery.