FCA probe and bonus clawbacks: WH Smith acts against former directors as North America profit plunges
WH Smith’s board will trigger clawback provisions for senior executives following accounting errors woes that had resulted in a probe by the Financial Conduct Authority (FCA).
WH Smith chief executive Carl Cowling stepped down with immediate effect last month after the report, produced by Big Four audit firm Deloitte, identified weaknesses in the operations of the firm’s North America division.
The financial review found that profit at its North America division had been overstated by approximately £30m, wiping tens of millions of pounds from its earnings and causing shares to tumble.
In its delayed preliminary results, released on Friday, the board, in a rare move, is applying malus and clawback provisions to recover bonuses from former executive directors following the profit restatements.
Profit plunges
This comes as its headline trading profit in the North America division plummeted from a restated £34m in 2024 to just £15m in 2025, primarily due to a £23m reduction in supplier income and inventory write-downs.
The group expects North America to bounce back to 7–8 per cent in FY26 after the errors are cleared.
The misleading accountancy woe that dominated the headlines has caused the FCA to commence a formal investigation into WH Smith’s compliance, as confirmed by the board this morning.
The group is still operating under Interim CEO Andrew Harrison while the search for a permanent successor and new board members with North American retail experience continues.
Interim boss vows to rebuild confidence
Over the last financial year, the group has officially transitioned into a global travel retailer following the strategic sale of its UK High Street business and Funky Pigeon.
Despite corporate restructuring, total group revenue from continuing operations rose 5 per cent to £1.5bn, driven by a 12 per cent jump in rest-of-world markets.
Its UK Travel division delivered a record trading profit of £130m, generated by a 20 per cent growth in health and beauty sales.
The Group stated it expects to deliver FY26 group profit before tax and non-underlying of £100m – £115m.
WH Smith proposed a final dividend of 6.0p, bringing the full-year total to 17.3p, rebased to match the earnings of the new “pure-play” travel business.
“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,” stated Harrison.
He added, “We are acting at pace progressing our remediation plan and are committed to ensuring that we strengthen our financial controls and governance as we move forward.”