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WH Smith PLC on Wednesday said Chief Executive Carl Cowling has resigned after a probe found ‘shortcomings’ in accounting treatments in the firm’s North American division. The Swindon, England-based travel retailer instructed Deloitte LLP to undertake the review back in August after an internal investigation found profit had been overstated. On Wednesday, WH Smith said Deloitte’s review found the accounting treatment for supplier income adopted by the North America division was not consistent with the group’s accounting policy and not consistent with the requirements of the relevant accounting standards. Deloitte blamed a ‘target-driven performance culture’ and ‘decentralised divisional structure combined with a limited level of group oversight of the finance processes in North America’ for the issues. 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, it noted. WH Smith 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,’ she added. Shares in WH Smith shook off a weak start to trade 3.1% higher at 632.50 pence each in London on Wednesday morning. They had earlier traded as low as 585.50p and are down 50% in the last 12 months. Following the review WH Smith said CEO Cowling, who has held the position since 2019, offered his resignation which the board accepted. He will step down as group CEO and director with immediate effect but remain employed until February 28, 2026 to ensure an orderly handover of duties. ‘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,’ Cowling said in a statement. ‘We wish Carl every success in the future,’ Chair Court said. WH Smith said the board has begun a comprehensive search process for a new group CEO. In the meantime, Andrew Harrison, head of the UK division, will assume the role on an interim basis. Deloitte said supplier income recognition has been overstated in North America although this is substantially a ‘timing rather than an existence issue’, and relates to the application of accounting standards. Accounting treatment of supplier income for financial 2025 across the UK and Rest of the World travel divisions is ‘appropriate and supplier income has been appropriately recognised in these divisions,’ it added. As a result, headline pretax profit for financial 2025 is now expected between £100 million to £110 million, compared to prior guidance in the region of £110 million. In financial 2024, WH Smith reported headline group profit before tax and non-underlying items of £166 million, up 16% from £143 million the year prior. In North America, headline trading profit is expected to be in the range of £5 million to £15 million, down £25 million outlined in August, and previous market expectations of £55 million. The revision from the previous market expectation of £55 million includes a net reduction in supplier income of £22 million, additional £20 million one-off costs relating to inventory, offset by a potential £13 million supplier income restatement benefit from prior years. Headline trading profit for the UK division is expected in the region of £130 million and around £14 million in the ROW division. The company expects net debt to be in the region of £390 million with leverage expected to be around 2.1 times as at August 31. WH Smith said it appointed a new chief executive for the North America division in June, is currently reviewing the North America leadership team and has also taken steps to strengthen its group finance and audit and risk teams. As a result of the review conducted to date, WH Smith expects to incur fees of up to £10 million within non-underlying costs in financial 2025. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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