‘WHSmith, JD Sports and Primark can successfully target a slice of American retail pie’

A sales rise of 13% would normally be regarded as a reason to pop the champagne corks in these tough retail times.

That’s what WHSmith reported in constant currency at its US business – a key focus for growth – but the City was a bit sniffy in response.

That’s because of factors such as the impact of the product cycle at the InMotion business, changes to visitor patterns that affected stores in resorts such as Las Vegas and profitability being flat, reflecting investment in the North American arm.

But it would be wrong to be dismissive of the retailer’s Stateside aspirations.

The US is, in the words of WHSmith chief executive Carl Cowling, the retailer’s “most exciting opportunity for growth”.

“Cowling tells me that the ability to win shops in sought-after travel locations is WHSmith’s ‘secret sauce’ as it seeks to build a 20% market share”

It has already become, in the wake of landmark acquisitions such as InMotion in 2018, WHSmith’s second-biggest contributor to full-year profits after the flagship UK travel operation.

It is still at a relatively early stage of development, too, and there is a big opportunity to open more stores.

Cowling tells me that the ability to win shops in sought-after travel locations is WHSmith’s “secret sauce” as it seeks to build a 20% market share over the next four years.

As it does so, a key reason to be optimistic about the US opportunity is that WHSmith is increasingly applying the disciplines that have served it so well elsewhere – notably the UK travel business, which is the jewel in the retailer’s crown, its success evident in the 15% sales growth in the half, headline profits up to £37m from £31m and a shift towards being a one-stop store for travellers.

WHSmith describes its approach to its trading space as “forensic” and few would argue that’s not the case.

Informed by a growing volume and variety of US data, it is implementing changes to power productivity and returns, from combining its MRG and InMotion operations to introducing more drinks chillers.

That great success achieved in UK travel retail is in the end what provides confidence that WHSmith can become big in America.

And, while the US performance may have disappointed analysts, the business is by no means a problem child for the group.

“The significance of the Hibbett deal is evident in the fact it is expected to increase North America’s share of JD’s group sales from about 32% to approximately 40%”

WHSmith is not the only British or Irish retailer with the States in its sights.

JD Sports made a big move this week with the proposed £899m acquisition of US counterpart Hibbett, bringing in 1,169 stores in the southeast of the country where at the moment JD has a limited presence.

The significance of the deal is evident in the fact that it is expected to increase North America’s share of JD’s group sales from about 32% to approximately 40%.

It is also expected to “strengthen further our key brand partner relationships in the largest sportswear market in the world”.

“Primark has taken a slow but sure approach to US expansion. It is right to do so because the history of retailers from this side of the pond is peppered with failure and withdrawals”

Value clothing giant Primark is also building a US business. The retailer reported this week that sales there were ahead by 38.4% in the first half, “driven by new store openings, which performed well”, and adjusted operating profit “improved significantly”.

Primark, which now has 27 US branches, has taken a slow but sure approach to US expansion. It is right to do so because the history of retailers from this side of the pond is peppered with failure and withdrawals.

Marks & Spencer, Currys in its original incarnation as Dixons and Sainsbury’s are just three venerable names that ultimately had to beat a hasty retreat. Right now, the US is proving a massive headache for Dr Martens.

Such difficulties are salutary reminders that the US cannot be taken for granted. But it remains a land of opportunity and WHSmith, JD and Primark have so far navigated the market well.

The path to glory in the US may be as long as Route 66, but the trio are putting the miles behind them as they seek a slice of American pie.