WH Smith to claw back bonuses after accounting scandal as results show profit slump

WH Smith said it will claw back bonuses from former top executives after an accounting scandal emerged, as it published delayed results showing a slump in profits and disclosed that the Financial Conduct Authority is investigating the North America unit. Interim group chief executive Andrew Harrison said rebuilding investor confidence is the most important item on the agenda as shares fell on the news.

The retailer, which operates about 1,200 stores in airports and other travel hubs, reported that revenue for the year to Aug. 31 rose 5% to £1.55 billion, while underlying profits slipped to £108 million from £114 million a year earlier. The group said it is seeking to claw back “overpaid bonuses” from former bosses Carl Cowling, the former chief executive, and Robert Moorhead, the former finance director, who together earned just under £7 million for the 2023 and 2024 financial years. The accounting problems in North America have already triggered a sharp reaction from investors, with more than £600 million wiped from WH Smith’s share price in one of the stock market’s steepest one-day declines this year.

WH Smith said it would cooperate fully with any regulatory engagement related to the North America issue and confirmed that the FCA has opened an investigation. The company noted that the North American episode involved the U.S. unit booking promotional revenues earlier than appropriate, a practice that went undetected for three years and has prompted a broad remediation plan.

The group warned that the year’s end results reflect a difficult operating environment and that it remains focused on strengthening financial controls and governance. Harrison emphasized that the remediation plan is being pursued “at pace” and that the board recognizes the need to restore trust among investors, customers, and suppliers as the group cleans up its North America operations. InMotion, WH Smith’s North American electronics accessories business, will undergo a targeted store review, with around 120 outlets evaluated for potential underperformance. The company said it could close up to 20 InMotion stores, though the division is still viewed as essential to its growth ambitions in travel retail, given travelers’ ongoing need for cables, power banks, headphones, and related accessories.

Analysts weighed in on the update. Mark Crouch, market analyst at eToro, described WH Smith as a case study in how quickly a dependable retail business can unravel when investor trust is shaken. He noted that while the company narrowly missed annual profit expectations, the bigger issue is management’s decision to review parts of the North American business amid ongoing fallout from last year’s accounting errors. The stock’s reaction reflected a broader reassessment of the group’s governance prospects as the remediation plan unfolds.

The results also fit a broader pattern for WH Smith, which earlier this year sold its High Street business in a pivot toward its travel-focused model. While the core travel arm remains a strength, the North American exposure and the accounting scandal have overshadowed a modest top-line improvement. The FCA investigation adds a separate regulatory layer to an already challenging period for the company’s leadership and investors. The coming months will be pivotal as WH Smith works to demonstrate that governance improvements and a disciplined cost base, coupled with a careful rationalization of InMotion, can restore confidence and stabilize the stock at a time when travel retail faces a bumpy recovery in some regions.

As WH Smith presses ahead with its remediation plan, questions remain about the pace and scope of reform, the durability of its North American business, and the speed with which investors will reward improved governance and stronger financial controls. The FCA inquiry and the proposed clawbacks signal a more aggressive governance posture as the company seeks to rebuild credibility in a market that has faced broader inflationary pressure and evolving consumer travel patterns. The balance between pruning underperforming outlets and preserving growth opportunities in InMotion will be a key challenge for Harrison and the board in the quarters ahead.