WHSmith group chief executive Carl Cowling has stepped down from his role after an accounting investigation by Deloitte.
In an announcement on the London Stock Exchange today, WHSmith said the accounting treatment for supplier income in the North America division was “not consistent with the group’s stated accounting policy” or “consistent with the requirements of the relevant accounting standards”.
Recognition of supplier income in the US was found to be overstated by around £30m.
It added that there were weaknesses in the composition of the finance team and insufficient systems, controls and review procedures for supplier income across commercial and finance functions.
Group headline trading profit for the year is expected to be between £100m and £110m, down nearly 55% from last year.
An extensive year-end review process for the North America division has been undertaken, and the business now expects profit to be in the range of £5m to £15m, down from the revised expectation of around £25m announced in August and previous market expectations of £55m.
A breakdown of this revision includes a net reduction in net supplier income of £22m and a gross reduction of £32m, of which £20m is deferred to future years. Around £12m has not been delivered due to delays in signing supplier income contracts.
A review of the North America leadership team is underway
Chief executive resigns
Following the investigation, group chief executive Cowling offered his resignation, which was accepted with immediate effect. He also stepped down as a board director.
His employment remains until February 28, 2026, and the board will look to new leadership to lead the company through its next phase.
Andrew Harrison, chief executive of the UK division, will become interim group chief executive.
WHSmith chair Annette Court said: “This is an extremely serious matter that has had the board’s full attention, and we sincerely apologise for the shortcomings identified.
“While the issues identified arose in our North America division, we recognise the importance of strengthening controls, governance and reporting procedures across the group.
“Our priority now is to rebuild trust and credibility and to improve the performance and profitability of our North America division. We are confident that the actions we have taken and will continue to implement over the months ahead will ensure a strong foundation for the business going forward.”
She thanked Cowling for his “significant contribution to WHSmith over the last 11 years” and wished him future success.
Cowling added: “Whilst the issues identified in the Deloitte review arose in our North American division, I recognise the seriousness of this situation and, as group CEO, feel it is only right that I step down from my position.
“It has been a privilege to lead WHSmith for the past six years as CEO. During this time, we have guided the company through the unprecedented challenges of the pandemic, pioneered our highly successful one-stop-shop for travel essentials, and completed the divestment of our high street and online businesses.
“I would like to thank the entire team for their support and I wish them well.”
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