JB Hi-Fi rival at Australian airports WH Smith has suffered a major share price slump as declining travel demand and underperforming markets such as Australia weigh on earnings following the outbreak of conflict in the Middle East.

The UK-based retailer reported last night that total revenue for the past 14-week period fell 2% year-on-year on a constant currency basis, reflecting softer passenger growth in recent weeks.

During the period, five underperforming stores were closed across several markets, with the company currently in discussions with landlords regarding plans to either exit additional locations or transition stores to a franchise model.

WH Smith said ongoing uncertainty surrounding the Middle East conflict and pressure on gross margins, including a recent deterioration in its North American division, means the Group now expects FY26 headline profit before tax and non-underlying items of between A$155 million and A$186 million.

Management said its outlook for the full financial year reflects both observed and anticipated declines in passenger numbers, weakening consumer demand across all divisions, reduced brand marketing activity, increased promotional discounting and ongoing inflationary pressures.

The Group said it is assuming no near-term improvement in consumer confidence and that global jet fuel supplies remain stable.

Shortly after the announcement, WH Smith shares plunged 16% after the retailer downgraded earnings guidance and launched a A$219 million capital raising to strengthen its balance sheet.

The FTSE 250-listed company, which sells books, magazines and consumer electronics products through airport, university and hospital outlets in Australia and other markets, said it had placed 25 million new ordinary shares at 410 pence each.

The issue price represented a 17% discount to WH Smith’s previous closing price of 492.2 pence.

Over the seven weeks ended June 6, the company’s US revenue declined 4%, compared with growth of 2% recorded during the first seven weeks of the second half since February 28.

WH Smith said like-for-like revenue at its US airport operations fell 2% as rising airfares and lower airline capacity linked to the Middle East conflict negatively impacted passenger numbers.