WH Smith probed by regulator over accounting error

WH Smith Probed by Regulator Over Accounting Error

– WH Smith Group operates outlets in airports, service stations, and hospitals.

The UK’s financial regulator, the Financial Conduct Authority (FCA), has launched an investigation into WH Smith after the retailer discovered accounting errors within its North America division earlier this year. This scrutiny centers on whether WH Smith failed to disclose pertinent information to investors.

In a bid to address these issues, WH Smith recently announced the postponement of its annual results and intends to recover overpaid bonuses distributed to some executives last year. The retailer’s challenges have compounded, with a notable 40% drop in its share price following the accounting fiasco and the resignation of its chief executive.

Key updates regarding WH Smith’s situation include:

– WH Smith divested its chain of 480 High Street shops this year, which have been rebranded as TG Jones by the new owner.
– The company retains approximately 1,300 branches located in railway stations, airports, and other transport hubs.
– For the fiscal year ending August 31, WH Smith reported a pre-tax profit, excluding one-off costs, of £108 million.
– Following revelations of overstated revenues in North America—estimated to be as much as £50 million—profit forecasts were significantly downgraded.
– Annual results, initially set to be released on November 12, were delayed twice, culminating in the resignation of CEO Carl Cowling after an independent investigation into the accounting discrepancies.

Andrew Harrison, the interim group chief executive, acknowledged the challenges faced: It has been a difficult end to the year for the group. The board and I are acutely aware that we have much to do to rebuild confidence in WH Smith and deliver stronger returns. He emphasized the company’s commitment to enhancing financial controls and governance moving forward.

Additionally, WH Smith has ambitious plans to revamp its stores by 2026, aiming to create one-stop shops that cater to travelers by offering essential items, food-to-go, and health and beauty products.

In summary, WH Smith is navigating a tumultuous period marked by regulatory scrutiny and significant operational changes. As the company seeks to recover and improve its performance, the spotlight remains on ensuring robust financial practices and restoring investor trust.