WHSmith shares slide after accounting error

UK retailer WHSmith reveals an overstatement in its US arm, prompting a Deloitte review and a sharp stock drop.

WHSmith slides after North American profit overstatement

WHSmith said profits from its North American arm for the year to August would be about £25m, down from market expectations of about £55m. The group said the overstatement was largely due to the accelerated recognition of supplier income and cut its forecast for the year to about £110m in headline profit before tax and one-offs. It has appointed Deloitte to conduct an independent review, with preliminary results due in November. Shares fell about 32% in early London trading. WHSmith has been shifting focus from its high street stores to travel retail after selling the UK business to Modella Capital this year. Activist investor Palliser Capital, which owns around 5% of the stock, has criticized performance and called for stronger governance. The episode adds to ongoing questions about internal controls as WHSmith pursues growth through acquisitions and a travel-focused strategy.

WHSmith, founded in 1792, now operates roughly 1,300 stores in airports, stations and hospitals, and has pursued an expansion path that included Marshall Retail Group in 2019. The governance challenge comes as the sector faces uneven post pandemic demand, rising costs, and tighter investor scrutiny of financial reporting practices.

This incident tests WHSmith’s ability to restore trust after a sizable restatement. Appointing Deloitte signals seriousness and a move toward independent oversight, but the time needed to complete the review and explain changes will matter to investors. The market reaction underscores how quickly questions about internal controls can eclipse growth narratives built around travel retail. In the broader context, profitable expansion through acquisitions has created momentum for WHSmith, yet it also raises the stakes for governance and disclosure. Palliser Capital’s stake adds pressure and highlights the risk that activist investors will demand clearer accountability and strategic focus in a sector sensitive to consumer spending cycles.

Highlights

Trust is rebuilt in steps, not headlines.