WH Smith says it has ‘much to do’ to rebuild confidence
WH Smith has said it has much to do to rebuild confidence following an accounting error which has led to an investigation by the Financial Conduct Authority.
In a preliminary full year results announcement today, the retailer stated that its total group revenue increased by 5% to £1.55 billion in the 12 months to 31 August as revenue in the UK, North America and the rest of the world rose by 5%, 7% and 12% respectively.
Headline group pre-tax profit before non-underlying items declined to £108 million from £114 million in the previous year. Headline group trading profit fell to £159 million from a prior £170 million.
WH Smith has now completed its transformation into a pure-play travel retailer following the sale of its high street business and funkypigeon.com.
Subscribe to TRBLast month, the group announced that its chief executive had stepped down following an investigation into an accounting error relating to its North America operations. An independent review by Deloitte found a number of “shortcomings” which resulted in WH Smith overstating profits in its US business by as much as £50 million.
WH Smith has now confirmed that The Financial Conduct Authority has commenced an investigation into the company. Following the findings of the Deloitte review, the group now has a remediation plan in place which is “progressing at pace”.
It is also continuing its search for a new chief executive as well as two non-executive directors, with one area of focus being North America retail experience.
Andrew Harrison, WH Smith interim group chief executive, said: “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 WH Smith and deliver stronger returns as we move forward. 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.
“Following the sale of our UK High Street business and Funky Pigeon during the year, we are now a pure-play global travel retailer. Travel retail is a high growth market, and we have attractive market positions in the UK, North America and our international markets from which we are well-positioned to grow.
“I would like to thank our colleagues who have shown the utmost commitment and professionalism during an uncertain and busy period for the business.
“As Interim CEO, my focus is to provide stability and to lead the group with transparency and discipline. WHSmith is a business with an exciting future and I look forward to executing against our clear priorities to ensure we capitalise on the attractive opportunities ahead.”
