WH Smith is set to claw back bonuses from bosses after an accounting scandal.
As it published delayed results showing it had suffered a slump in profits., the ‘one stop travel shop’ retailer revealed it is under investigation by the City watchdog.
Andrew Harrison, interim group chief executive, said ‘building faith of investors is the most important thing that we have on our agenda’ as shares plunged further this morning.
WH Smith, which runs about 1,200 stores in airports and other travel hubs, said it was seeking to claw back ‘overpaid bonuses’ from former bosses.
Former chief executive Carl Cowling and finance director Robert Moorhead were together paid just over £7million for the 2023 and 2024 financial years.
WH Smith has been embroiled in a scandal over accounting failures in North America this year
Both individuals quit last month, after a review found its US unit had improperly booked promotional revenues from suppliers early, boosting short-term profits.
News of the blunder, which went undetected for three years, saw more than £600 million wiped off WH Smith’s share price in one of the biggest one-day falls in stock market history.
The group said it was ‘committed to co-operating fully with any engagement in relation to the North America accounting issue from any regulatory body or other authority’.
And it confirmed the the Financial Conduct Authority has opened an investigation.
Shares tumbled 5 per cent this morning after another bleak update from the group – which sold its High Street business earlier this year.
Sales for the year to August 31 increased 5 per cent to £1.55billion while profits fell to £108million, compared to £114million last year.
Harrison, interim group chief executive, said: ‘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 as we move forward.
‘We are acting at pace progressing our remediation plan and are committed to ensuring that we strengthen our financial controls and governance as we move forward.’
The group said it would review 120 stores in its InMotion business in North America, which sell electronic accessories. It could close up to 20 of these shops.
But this division and region are still essential to the group’s growth ambitions, according to Harrison.
‘People can’t travel these days without, you know, needing a cable or a power bank or, you know, or even headphones,’ he added.
Mark Crouch, market analyst at eToro said: ‘WH Smith has become a case study in how quickly a dependable retail business can unravel when trust is shaken.
‘The stationer-turned-travel retailer narrowly missed annual profit expectations, but the more telling development was management’s decision to review parts of its North American business as it continues to mop up the fallout from last year’s accounting errors.’
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