The chief executive of WH Smith is set to resign after 11 years with the retailer after an independent probe into a US accounting crisis revealed ‘extremely serious’ failures.
WH Smith was forced to slash earnings expectations for the year and delay its annual results, as it grapples with the fallout of an accounting blunder that saw it overstate profits in its US business by around £30million.
The retailer on Wednesday told shareholders Deloitte’s investigation into the issue unearthed a number of ‘shortcomings’ in the accounting practices within its US business.
Deloitte’s review found weaknesses in the composition of the unit’s finance team, as well as insufficient systems, controls, and review procedures for supplier income across commercial and finance functions.
It means WH Smith now expects to post a group headline trading profit of £100million to £110million for 2025, down almost 55 per cent on last year
WH Smith’s North American profit is now expected to fall to just £5million to £15million, well below market expectations of £55million before the issues were initially revealed.
Car Cowling steps down from WH Smith board with immediate effect
The group announced boss Carl Cowling had offered his resignation and would step down as CEO and a board member with immediate effect.
He will stay with the firm until the end of February to ‘ensure an orderly handover of his duties’, WH Smith said. UK chief Andrew Harrison will step in as interim CEO while the board looks for a successor.
Cowling said in a statement: ‘Whilst the issues identified in the Deloitte review arose in our North American division, I recognise the seriousness of this situation and as group CEO feel it is only right that I step down from my position.’
WH Smith shares fell 2 per cent to 603.5p in early trading. They have now lost almost half their value since the start of the year.
Annette Court, chair of WH Smith, added ‘This is an extremely serious matter that has had the board’s full attention, and we sincerely apologise for the shortcomings identified.
‘While the issues identified arose in our North America division, we recognise the importance of strengthening controls, governance and reporting procedures across the Group.
‘We have acted swiftly to build a comprehensive remediation plan and will reinforce the financial discipline and integrity that underpin our business moving forward.’
Court said the retailer’s priority is to ‘rebuild trust and credibility and to improve the performance and profitability of our North America division’.
It comes as WH Smith reinvents itself as a pure-play travel retailer after selling its high street business to Hobbycraft owner Modella Capital earlier this year.
WH Smith operates in the US via airport retailer Marshalls and tech operator InMotion.
Interim boss Harrison said: ‘Our immediate priority is to maintain a relentless focus on operational excellence and execute the remediation plan with discipline.
‘We have a very resilient business and the fundamentals of the Group are strong. Working alongside Max Izzard, Group CFO, I am confident that we can move forward and position the Group for long-term growth and success.’
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