Key Points:
- CEO resignation after accounting failures
- Profit outlook slashed with the US division hit
- Strategic focus on travel retail recovery
WH Smith’s chief executive, Carl Cowling, has resigned after an independent review uncovered accounting failures in the company’s North American division. The findings forced the retailer to cut its profit outlook and confront significant operational weaknesses at a time when it is trying to pivot toward its international travel retail business.
The company had lost nearly £600m in market value in a single trading day earlier this year when the accounting issues first surfaced. Wednesday’s announcement of Carl Cowling’s departure lifted shares by more than 7%, though the stock remains far below its pre-incident levels. Andrew Harrison, currently the UK chief executive, will serve as interim group CEO while the board begins the search for long-term leadership.
Investigations Reveal Weak Controls in US Division
The Deloitte review found that WH Smith had overstated profits in its US operation by up to £50m due to exaggerated supplier income. The investigation cited weaknesses in the US finance team, limited group oversight and insufficient controls governing supplier-related revenue. The findings forced the company to reassess its expectations for the division, with projected profits for the 2024-25 year now estimated between £5m and £15m. This is a sharp drop from the original £55m forecast.
Leadership acknowledged the need for tighter governance and more robust financial systems across the organisation. The board described strengthening oversight as an immediate priority, especially as North America had been identified as a long-term growth opportunity for its travel-focused retail operations.
Refocusing Strategy and Rebuilding Investor Confidence
Despite the setback, WH Smith reaffirmed its strategic commitment to expanding in airports and railway stations. Group profits for the year ending 31 August are now expected to land between £100m and £110m—about 55% lower than the previous year. The company noted that new leadership will be responsible for executing the remediation plan and stabilising performance across the division.
Carl Cowling will remain with the company until the end of February to support a smooth transition. Market analysts noted that the scale of the value drop made a leadership shift almost unavoidable after the accounting incident and the recent sale of the high street business. The board is now focused on restoring investor trust, strengthening internal controls and positioning the company for its next phase of operational and financial recovery.
Visit Visionary CIOs for the most recent information.
