By Raechel Thankam Job and Yadarisa Shabong
(Reuters) -Britain’s WH Smith said on Wednesday that Carl Cowling had stepped down as CEO after an independent review revealed accounting failures in the travel retailer’s U.S. operations, prompting it to cut its profit forecast.
Andrew Harrison, head of WH Smith’s UK division, will act as interim CEO while the board looks for Cowling’s replacement. Shares in WH Smith fell about 2%, taking losses to 47% since the accounting issues surfaced in August.
WH Smith enlisted Deloitte to review its accounts in August after an internal evaluation revealed earnings had been overstated at its second-largest division.
Deloitte found WH Smith’s North America division had been recognising supplier income – payments from vendors for promotional and marketing support – earlier than it should have, and that some 20 million pounds ($26 million) would be deferred.
“This is an extremely serious matter that has had the Board’s full attention, and we sincerely apologise for the shortcomings identified,” WH Smith Chair Annette Court said, adding the priority was to rebuild trust and to improve profitability of the division.
During Cowling’s six years as CEO, WH Smith became a pure-play travel retailer after selling its UK high street business in June. It pursued rapid expansion in North America, which contributed about 20% of group revenue in fiscal 2024.
NORTH AMERICA LEADERSHIP REVIEW
The review also identified weaknesses in the composition of the North America finance team, WH Smith said, along with insufficient systems, controls and review procedures.
WH Smith said it was reviewing the leadership of the North America business, where Huw Crwys-Williams was appointed as CEO less than five months ago.
It now expects group headline trading profit for fiscal 2025 of between 100 million pounds and 110 million pounds, down nearly 55% from last year.
Profit in North America is expected to fall to between 5 million pounds and 15 million pounds, sharply lower than the 25 million pounds it expected previously.
($1 = 0.7613 pounds)
(Reporting by Raechel Thankam Job and Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips and Alexander Smith)
