Regulator Investigates WH Smith for Accounting Error
The UK’s financial regulator has initiated an investigation into WH Smith due to accounting discrepancies found in its North America operations. The Financial Conduct Authority (FCA) is assessing whether the retailer complied with regulations concerning investor communications regarding these issues.
WH Smith’s Accounting Missteps
Earlier in the year, WH Smith revealed a significant overstatement of revenues in its North America segment, estimated at around £50 million. This revelation prompted the retailer to delay the announcement of its annual financial results. Originally scheduled for November 12, the report was postponed twice, leading to the resignation of chief executive Carl Cowling following an independent review.
Impact on Business and Leadership
This accounting blunder had severe consequences for WH Smith. The company experienced a 40% drop in its share price and the loss of its chief executive. Interim group chief executive Andrew Harrison acknowledged the challenges facing the company, stating that restoring confidence will be a priority.
Financial Performance
Despite these challenges, WH Smith reported a pre-tax profit of £108 million, excluding one-off costs for the year ending August. The company has pledged to recover “overpaid” bonuses from certain executives awarded in the previous year.
Strategic Changes Ahead
- WH Smith sold its chain of 480 High Street shops, now rebranded as TG Jones.
- The remaining 1,300 branches operate in railway stations, airports, and other transport hubs.
- Plans are in place to revamp these stores by 2026 into “one-stop-shops,” offering travel essentials and food-to-go options.
WH Smith is determined to reinforce its financial controls and governance moving forward. Harrison emphasized the importance of addressing these issues to ensure stronger returns and restore trust in the brand.
