WHSmith links IT trouble to fall in profits

Troubled retailer WHSmith has cited problems integrating new IT systems as partly to blame for a 29% fall in pre-tax profits to...

Troubled retailer WHSmith has cited problems integrating new IT systems as partly to blame for a 29% fall in pre-tax profits to £65m over the past six months.

WHSmith went live with the Retek Merchandising System and Demand Forecasting applications last July, in an attempt to increase on-shelf stock availability and decrease stock levels in warehouses.

The software uses statistical time forecasting algorithms and modelling techniques to help retailers predict demand and order stock accordingly. By using the system, WHSmith hoped to make savings of £10m a year.

However, after announcing poor trading figures, the retailer's chief executive Kate Swann told analysts that the roll-out had been problematic. "If you shopped over Christmas, you would have realised that availability in store was not great. There are a number of reasons for that," said Swann. "There are some systems issues. We implemented a new system, Retek, that has had problems."

The company also announced last week that it has suspended plans to roll out Retek across its travel business.

A WHSmith spokeswoman told Computer Weekly that the Retek applications, which link into its IBM pSeries-based infrastructure using software from SeeBeyond, have taken time to bed in.

"There were some difficulties to do with our ability to integrate our processes with the new Retek systems, although the software itself is working well and we are happy with Accenture and continue to work with them," she said. The difficulties "had an impact on stock availability over Christmas," she added. 

WHSmith has appointed a new IT director, Peter Swann (no relation), to address the issues.

Both Retek and Accenture, which was the systems integrator on the roll-out, insisted that the software itself was working well.

Tarik Taman, vice-president for Retek in Europe, said, "The Retek solution at WHSmith is robust and stable. The business has seen measurable benefits since implementing Retek and anticipates significant further benefits. Retek will continue to work with its IT team to support their evolving business processes."

A spokesman for Accenture said, "There are no questions about the robustness or the integrity of the system."

The integration issues would have adversely affected WHSmith's merchandise planning, resulting in poor availability on shelves and surplus stock in warehouses, said Tony Savage, director of consulting at retail consultancy RMDP. He said WHSmith could have faced data quality issues as it moved from old to new systems.

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