WH Smith, the well-known British retailer, finds itself at the center of a regulatory storm after accounting failures in its North American operations triggered a sweeping investigation by the UK’s Financial Conduct Authority (FCA). The probe, announced on December 19, 2025, comes after a tumultuous year for the company—one marked by profit warnings, a dramatic CEO departure, and a sharp fall in share price. As the FCA examines potential breaches of UK Listing Principles and Disclosure and Transparency Rules, WH Smith faces mounting pressure to restore investor trust and chart a new course for its future.
The trouble began to surface in earnest on November 19, 2025, when WH Smith disclosed that an independent review had uncovered significant accounting failures in its US division, its primary growth engine in recent years. According to Sky News, experts from Deloitte determined that the North America business had been incorrectly recognizing supplier income, leading to an overstatement of earnings. The fallout was swift: Carl Cowling, who had served as CEO for six years and overseen the sale of the company’s UK high street business earlier in 2025, resigned with immediate effect. The company’s annual results, already delayed twice as it grappled with the issue, would reveal the depth of the crisis.
On December 19, 2025, WH Smith reported headline pre-tax profits of £108 million for the year ended August 31, down from £114 million the previous year and slightly below analysts’ expectations. Net profit plummeted to just £2 million from £65 million, as reported by Analytics Insight. The company’s headline trading profit in North America fell to £15 million, a stark contrast to previous market expectations of around £55 million, after the accounting error was found to have overstated US profits by approximately £30 million. The error was tied to the accelerated recognition of supplier income—a technical misstep with major real-world consequences.
In response to these revelations, the FCA launched an official investigation into potential breaches of listing and disclosure rules. As Reuters noted, this is the first time since the pandemic that WH Smith has cut its annual dividend, a move that underscores the seriousness of the situation. The company’s shares responded with volatility, falling as much as 7% on the day of the announcement before recovering some ground to close down about 3.7% at 660 pence by mid-morning, according to Reuters and Analytics Insight. Since the accounting issues first surfaced in August 2025, WH Smith’s shares have lost nearly 40% of their value, a sobering measure of shaken investor confidence.
Interim group CEO Andrew Harrison addressed the company’s challenges candidly: “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.” This sentiment was echoed by Chair Annette Court, who stated she is “actively working” to find a permanent CEO to steer the company through this critical period.
WH Smith’s transformation into a pure-play travel retailer—after selling its UK high street business and Funky Pigeon earlier in the year—was supposed to herald a new era of growth. The company now operates exclusively from travel locations such as airports, rail stations, and travel hubs across the UK, North America, and other international markets. Indeed, total revenues for the year rose 5% to £1.55 billion, with revenues up 5% in the UK, 7% in North America, and 12% in the rest of the world. However, headline trading profits fell from £170 million to £159 million, with the group attributing the decline to a year of heavy investment in the UK and underperformance in parts of its North American estate.
To address the crisis, WH Smith has set out a series of strategic priorities. These include strengthening its leadership in UK travel essentials, expanding its health, beauty, and food-to-go ranges, and sharpening its focus in North America by exiting fashion and speciality stores and reviewing the scope of its InMotion business, which sells electronic and digital accessories primarily in airports. Internationally, the company plans to concentrate on core markets, pursue new growth through franchises, and exit non-core territories. A remediation plan is underway following Deloitte’s findings, with a particular emphasis on correcting the supplier income recognition processes that led to the accounting misstatements.
The company also announced plans to recover overpaid bonuses from former senior executives, a move that signals its intention to hold leadership accountable for the missteps. According to both Sky News and Reuters, WH Smith intends to cooperate fully with the FCA’s investigation and any additional regulatory inquiries. The company’s annual profit, while only slightly below expectations, has set the stage for a year of “re-based expectations and re-investment,” as JP Morgan analysts put it, with a more focused strategy and a higher-quality travel portfolio anticipated for 2026.
Amid the crisis, WH Smith’s North American review includes a hard look at its InMotion business, as well as plans to exit some unprofitable fashion and speciality stores in its Resorts business. The company is also considering withdrawing from certain underperforming US markets altogether. “WH Smith has become a case study in how quickly a dependable retail business can unravel when trust is shaken,” said eToro analyst Mark Crouch, as quoted by Reuters.
Despite the turmoil, the broader market context on December 19, 2025, was surprisingly positive. The FTSE 100 opened higher at 9,851 points, buoyed by gains in healthcare, energy, and banking shares, and by global optimism following softer-than-expected US inflation data. However, WH Smith’s woes stood out amid the general market uplift, with its shares underperforming peers and retail sales volumes in the UK decreasing by 0.1% in November, defying expectations for a Black Friday boost.
Looking ahead, WH Smith expects profitability in 2026 to remain static at the 2025 level of £108 million. The company’s leadership, now under interim CEO Andrew Harrison, faces the dual challenge of repairing reputational damage and delivering on its strategic ambitions. The search for a permanent CEO continues, with Chair Annette Court emphasizing the need for steady leadership during this period of uncertainty.
As the FCA investigation unfolds and WH Smith works to implement its remediation plan, the company’s future hinges on its ability to restore trust among investors, customers, and regulators alike. For a retailer that once prided itself on reliability, the coming months will be crucial in determining whether WH Smith can turn the page on its accounting scandal and reclaim its place as a leader in travel retail.
