WH Smith (LSE: SMWH) shocked investors by slashing its North America profit forecast after discovering an accounting error, sending shares down sharply.
The travel retail group now expects headline trading profit from its US division to land around £25 million for the year ending 31 August, down from the previous £55 million forecast. In financial 2024, the division reported £54 million.
At the time of writing, WH Smith shares were down 37%, as markets reacted to the profit revision. The company said the error stemmed from recognising supplier income too early, including incentives and discounts, during the North America division’s reporting.
As a result, WH Smith now expects overall headline profit before tax and non-underlying items of roughly £110 million, a 34% drop from last year’s £166 million. The firm has not clarified whether prior years were also affected. Broker Peel Hunt called the implications for earlier accounts “unclear.”
The board has instructed Deloitte to carry out an independent review. WH Smith operates more than 1,200 travel locations in airports, train stations, and hospitals, after selling its high street stores to Modella Capital, which will see the brand vanish from UK streets.