WH Smith Shares Fall as Company Faces FCA Investigation

The Financial Conduct Authority (FCA) has launched a formal investigation into WH Smith following the previously announced accounting errors woes.

This development follows the recent resignation of Chief Executive Carl Cowling, prompted by a Deloitte report identifying operational weaknesses within the company’s North American division.

WH Smith shares are down 2.5% in early Friday trading.

The board has initiated malus and clawback procedures to recover bonuses paid to former executive directors, a direct consequence of profit restatements for the financial years ending August 31, 2023, and August 31, 2024.

These actions underscore the severity of the accounting errors and the company's commitment to rectifying past missteps.

Preliminary results for the year ended August 31, 2025, reveal a company in transition. Total group revenue increased by 5% to £1,553 million, up from £1,473 million in 2024.

However, headline group profit before tax and non-underlying items dipped to £108 million, compared to £114 million the previous year. Headline diluted earnings per share also decreased, landing at 43.4p.

The company has proposed a final dividend of 6.0p per share, resulting in a full-year dividend of 17.3p per share. This maintains their dividend policy of 2.5x cover, reset to continuing business earnings.

WH Smith has completed its strategic shift to become a pure-play travel retailer, marked by the sale of its High Street business and funkypigeon.com.

The company is now focusing on expanding its presence in travel essentials, health and beauty, and food-to-go, particularly in the UK.

In North America, the strategy includes exiting fashion and specialty stores while reviewing the InMotion portfolio. The Rest of World division is focused on strengthening core markets and pursuing growth through a franchise model.

Andrew Harrison, Interim Group Chief Executive, acknowledged the challenges, stating, “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 WHSmith and deliver stronger returns as we move forward.” He emphasized the commitment to strengthening financial controls and governance.

Trading profit for the UK division increased to £131 million (pre-IFRS 16: £130 million) compared to £126 million (pre-IFRS 16: £122 million) in the prior year.

However, North America experienced a decrease in trading profit falling to £22 million (pre-IFRS 16: £15 million) from £38 million (pre-IFRS 16: £34 million) in 2024. The Rest of the World division saw a slight increase to £20 million (pre-IFRS 16: £14 million) from £18 million (pre-IFRS 16: £14 million).

Like-for-like revenue growth in the 13 weeks leading up to August 31, 2025, was 3%. The UK reported 3% growth, while North America saw 1%. Rest of the World delivered 6% growth. These trends have persisted into the first 15 weeks of FY26, with overall LFL growth of 3%.