WH Smith Chief Steps Down as Accounting Mistake Wipes Out Profits
On 19 November 2025, WH Smith announced that its chief executive, Carl Cowling, would be stepping down after an independent review revealed serious accounting errors in its North American business. The probe, led by Deloitte, found that WH Smith incorrectly booked more supplier income than it should have. This mistake inflated the company’s earnings by tens of millions of pounds. As a result, WH Smith has sharply revised down its profit forecasts, creating a shockwave in the markets.
In just a few months, the retailer’s value dropped dramatically, and faith in its financial management was shaken. The sudden leadership change marks a critical moment for the company, as it scrambles to restore trust with shareholders and rebuild its North American operations.
Background on WH Smith
WH Smith is a long-established British retailer, known for its presence in travel hubs like airports and railway stations. Over the years, the company has shifted its focus toward travel retail, having sold off most of its high-street business. Its North American arm has become a key part of its global strategy, contributing a growing share of revenue. But recent events have exposed how fragile that expansion has become.
What Went Wrong: Details of the Accounting Mistake
An independent review by Deloitte found serious accounting irregularities in WH Smith’s North American division. Specifically, the company recognized supplier income too early. Supplier income comes from rebates, marketing incentives, and promotional support. The review concluded that this income should have been deferred, not booked in the year ending August 31, 2025, as WH Smith had done.
As a result, the firm must reduce its North American trading profit by roughly £22 million and take on about £20 million in one-time inventory adjustments. The mistake reflects serious weaknesses in the accounting controls and internal systems in North America.
The CEO’s Resignation
On 19 November 2025, WH Smith announced that its CEO, Carl Cowling, would step down immediately following the Deloitte review. He has led the company for six years and played a major role in its travel-retail transformation. The board named Andrew Harrison, who heads its UK division, as interim CEO while it seeks a permanent replacement. Cowling expressed that, despite the failure being isolated to North America, he felt responsible and believed stepping down was the right move.
Financial Impact on WH Smith
The fallout from the accounting error has hit WH Smith hard. It slashed its group profit forecast for the fiscal year ending August 31, 2025, to £100-110 million. That’s a big drop from earlier guidance. The North American business is now expected to post only £5-15 million in trading profit, far below the earlier expectation of £55 million.
When the issue was first revealed in August, the company’s shares crashed, losing around 42% in value in a single day, and erasing nearly £600 million from its market cap. Analysts have called it a “disaster,” warning that the misstep raises deep concerns about WH Smith’s financial discipline and controls.
Beyond the profit restatement, WH Smith also expects some inventory write-downs tied to this issue. Its debt leverage is now under pressure: as of August 31, 2025, net debt is projected to be around £390 million, with a leverage ratio of roughly 2.1 times.
Reaction from Stakeholders
Investors reacted swiftly and harshly. The massive share price drop showed how shaken the market was. Shareholders and analysts voiced deep skepticism about the company’s governance and internal checks. For many, this wasn’t just a mistake; it signaled weak oversight.
Inside the company, WH Smith’s board moved fast. Chair Annette Court called the issue “extremely serious” and apologized for the shortcomings. She said the priority now is to rebuild trust and credibility, particularly in the North American arm. There’s also pressure from auditors, regulators, and potentially disgruntled customers and suppliers.
How WH Smith Plans to Recover?
In response, WH Smith has launched a remediation plan. It plans to overhaul how it recognizes supplier income by rolling out a global supplier income policy. The company will also build a new system to manage this income, aiming to tighten its financial controls.
The board is strengthening governance, especially around finance teams in North America. There is also a push for better oversight, with more frequent reviews and clearer accountability. WH Smith hopes these steps will help it regain market confidence.
Meanwhile, with Andrew Harrison stepping in as interim CEO, the company works on finding a long-term replacement who can steer it through this crisis and beyond.
Broader Lessons for Businesses
This scandal teaches a few key lessons. First, accounting discipline is vital. Mistakes in revenue recognition, especially with complex supplier deals, can quickly unravel a company’s finances. Second, strong governance and internal controls matter more than ever, especially when a business is growing fast. Third, leadership accountability is non-negotiable: when things go wrong, leaders must take responsibility.
Bottom Line
WH Smith faces a critical turning point. The accounting blunder has not only stripped billions off its value it has exposed deep management and control failures. Now, with new leadership and a recovery plan in place, its future depends on restoring trust. The coming months will be all about proving that this was a wake-up call, not the end of the road.
Frequently Asked Questions (FAQs)
The CEO resigned on 19 November 2025 after an accounting review found big errors in the company’s North America records. The mistakes affected profits and raised concerns about financial controls.
WH Smith reported a profit hit of more than £22 million after correcting the accounting error. The company also faced extra costs from inventory changes linked to the review findings.
WH Smith is fixing its financial systems and improving checks to avoid future errors. The company also changed leadership and started building stronger controls to restore trust after the review.
Disclaimer: The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
