WH Smith is taking steps to recover overpaid bonuses from former executives following an accounting error related to its North American operations. This issue, which inflated profits by as much as £50 million, is currently under investigation by the Financial Conduct Authority (FCA). The company announced its intentions during the reporting of its delayed annual results, with interim chief executive Andrew Harrison acknowledging the need to restore trust in the organization.
The accounting discrepancies resulted in the postponement of WH Smith’s annual results, which were originally scheduled for release on November 12. The situation escalated when Carl Cowling, the company’s chief executive, resigned last month after an audit conducted by Deloitte confirmed the financial irregularities.
In light of these developments, WH Smith disclosed that it is implementing measures to recover bonuses deemed overpaid to former executive directors. The company plans to apply “malus and clawback” provisions, which allow for the reduction or repayment of performance-based bonuses when profits are later restated. This action follows the restatement of profits for the financial year ending August 2024.
Harrison stated, “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.” He emphasized the company’s commitment to a remediation plan that aims to enhance its governance and financial controls.
The retailer’s focus has shifted towards its 1,300 stores located in global travel environments, such as airports and train stations, particularly after the sale of its high street chain of approximately 480 shops to Modella Capital in June. As a result of this sale, the WH Smith name is being replaced by the brand TGJones in British high streets.
Despite recent challenges, WH Smith reported a pre-tax profit of £108 million for the year ending in August, excluding one-off costs. The company also indicated a trading profit of £15 million in the UK, while group sales rose by 5% year-on-year to reach £1.6 billion, reflecting growth in both the UK and US markets.
In an effort to modernize and enhance its offerings, WH Smith announced plans for its largest-ever store revamp program, set to launch in 2026. This initiative aims to create a “one-stop-shop” format that combines travel essentials, food-to-go, and health and beauty products. Although this transition may cause short-term disruption, the company believes it will ultimately strengthen its market position and customer appeal.
As WH Smith navigates these challenges, the focus remains on restoring investor confidence and ensuring that robust financial governance is re-established. The search for a permanent chief executive is also underway, as the company seeks to stabilize its leadership during this critical period.
