Fitch puts WH Smith on watch

Fitch Ratings said it placed WH Smith plc's issuer default and senior unsecured ratings of BB- and short-term rating of B on rating watch negative.

The agency said the action follows WH Smith's announcement that it plans to separate its two businesses, retail and news distribution.

Excluding the news distribution business, the company's fiscal 2006 pro-forma sales and operating profit will decrease by £1.187 billion and £37 million, respectively, Fitch noted.

The separation might lead to significant one-off costs and would yield a less diversified retail business with a slightly reduced asset base and produce a greater reliance on seasonal consumer demand, the agency added.

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