WHSmith is facing a formal investigation by the Financial Conduct Authority (FCA) following significant accounting errors in its North America business. These errors have led to a drop in profits and prompted the retailer to restate its financial results for 2023 and 2024. The company is also attempting to recover bonuses from former executives implicated in the scandal.
Key Takeaways
- WHSmith’s headline pre-tax profit fell to £108m for the year ended 31 August 2025, down from £114m the previous year.
- The Financial Conduct Authority (FCA) has launched a formal investigation into potential breaches of UK listing and transparency rules.
- The company is seeking to recover up to £7m in bonuses from former chief executive Carl Cowling and ex-finance director Robert Moorhead.
- WHSmith has restated profits for 2023 and 2024 due to accounting errors related to supplier income and stock provisions in its North American arm.
- The retailer has undergone a strategic shift, selling its UK high street arm and Funky Pigeon to focus on its travel retail division.
Financial Performance and Accounting Errors
WHSmith reported a decline in its annual results, with headline pre-tax profit dropping to £108m for the year ending 31 August 2025, compared to £114m in the prior year. Headline trading profit also saw a decrease, falling to £159m from £170m. These figures were impacted by an accounting error in the North America division, where income was overstated, potentially by as much as £50m. This led to a profit warning and a significant drop in the company’s stock market value.
Regulatory Investigation and Bonus Recovery
The UK’s financial regulator, the FCA, has initiated a formal investigation into WHSmith. The probe will examine whether the company violated rules regarding the information disclosed to investors. In light of the accounting errors, WHSmith announced its intention to recover "overpaid" bonuses from former senior executives, including ex-CEO Carl Cowling and former finance director Robert Moorhead, who received over £7m in bonuses and share awards for the relevant years. The company is reportedly seeking to reclaim less than half of these amounts.
Strategic Shift and Future Outlook
Following the sale of its UK high street business and the online card business Funky Pigeon, WHSmith is now focusing exclusively on its global travel retail division. The company sees this as a high-growth market with attractive positions in the UK, North America, and international markets. Despite the recent challenges, WHSmith expects full-year headline pre-tax profit for FY26 to be between £100m and £115m. The company is implementing a remediation plan to strengthen financial controls and governance, with interim group CEO Andrew Harrison acknowledging the need to rebuild confidence and deliver stronger returns.
