21st Aug 2025 08:47
(Alliance News) - WH Smith PLC on Thursday more than halved guidance for its North American division after an investigation found profit had been overstated.
The Swindon, England-based travel retail company now expects headline trading profit from the North America division to be around GBP25 million for the financial year ending August 31, down from previous expectations of around GBP55 million. In financial 2024, headline trading profit in the North American business was GBP54 million.
In response, shares in WH Smith, which operates from more than 1,200 stores, plunged 34% to 758.14 pence each in London on Thursday morning.
WH Smith said it identified the overstatement during a financial review in preparation for the year-end results.
The overstatement is largely due to the accelerated recognition of supplier income in the North America division.
The group receives supplier income in the form of supplier incentives and discounts, WH Smith explained. These incomes are recognised as a deduction from cost of sales on an accrual basis as they are earned for each supplier contract.
As a result of the North America revision, WH Smith expects group headline profit before tax and non-underlying items to be in the region of GBP110 million, which would be down 34% from the year before.
In the financial 2024, WH Smith reported headline group profit before tax and non-underlying items of GBP166 million, up 16% from GBP143 million the year prior.
WH Smith didn't say whether or not prior years also included overstatements. "It remains unclear to us how this issue arose or what the implications will be for outer years," commented broker Peel Hunt.
As recently as the end of July, WH Smith said it was trading in line with market expectations.
The board has instructed Deloitte to undertake an "independent and comprehensive review".
By Jeremy Cutler, Alliance News reporter
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