WH Smith Group

As WH Smith Group prepares to announce its report and accounts for the year ending 31 August 1999, the company can look back on the past two years with a sense of relief.

In 1998, the company off-loaded its Waterstone’s chain to HMV Media after the bookshop’s chairman, Tim Waterstone, launched a takeover bid for the group which WH Smith successfully deflected.

The following year the retailer sold its Virgin/Our Price majority stake back to Virgin Group, bought a number of newsstands from rival distributor John Menzies and purchased Bookshop, which owns The Internet Bookshop.

And this year the group has invested in two publishing companies – Hodder Headlines and Helicon.

During this flurry of activity Ian Houghton, company secretary and director of legal services at WH Smith, says Linklaters has been the main adviser on corporate matters.

He says: “Linklaters was brought in about three years ago.” But he says: “We gave advice on [the transactions] internally and liased with Linklaters.”

Houghton says the firm also outsources work when litigation cases arise. “It goes outside because we do not have the resources,” he says.

The company has 546 high street stores in the UK, 180 WH Smith Europe Travel shops, 184 shops in airports and travel centres, and distributes goods to thousands of retailers throughout the country. But the legal department is run with just two lawyers, including Houghton.

He says: “We are fairly busy because there are only two of us.”

But the department is not expanding in the near future: “What I might like and what might happen are two different things, so the answer is not at the moment.”

The in-house team handles the majority of the contract-related commercial work. And issues surrounding the sale of goods through The Internet Bookshop are also handled internally.

Houghton says: “It has been quite interesting. There are issues to do with copyright in that it is argued that you cannot sell US editions in the UK.”

If there are problems with internet transactions they are taken care of by the company’s accountants.

In terms of trading law Houghton says the company uses Metcalfe Copeman & Pettefar. “The company has been using them for a long time because of the Sunday trading legislation. They are a niche firm and we will continue to use them,” he says.

The company outsources employment work to Manches for, but only in instances involving directors. Other employment matters are referred to the human resources (HR) department.

Houghton says: “It is down to our HR people to choose who they use, although at some point in the future we might bring them together.”

The UK business is broken down into units. The head office is in Swindon and the corporate office is based in London, in which Houghton has direct contact. But internationally it is a different story.

Houghton says that in the US, where the group has 416 shops, WH Smith sources its legal firms independently of the UK office. He says: “We are not qualified to practice in the US. The US business is involved in is airport shops and hotels. For example in Las Vegas we have concessions in some of the hotels there.”

The company has 12 branches in Hong Kong and Singapore. Commenting on the company’s European coverage, Houghton says: “After we sold off Waterstone’s we now only have shops in Paris and Alicante.

“I only occasionally talk to them to give commercial advice on contracts, in relation to Alicante airport and the Paris shop.”
Ian Houghton
Company secretary and director of legal services
WH Smith Group

Organisation WH Smith Group
Sector General retail
FTSE 250 ranking 67
Market capitalisation £1bn
Employees 28,000 worldwide
Legal function Two lawyers
Head of legal Ian Houghton
Reporting to Keith Hamill, group financial director
Main location for lawyers London
Main law firms Linklaters & Alliance (corporate), Herbert Smith (litigation and competition), Titmuss Sainer Dechert (property and intellectual property), Manches (property and employment), Metcalfe Copeman & Pettefar (trading law)