WH Smith Plc's Chief Executive Officer Carl Cowling resigned, as an accounting error forced the British retailer to cut its profit outlook in North America for a second time.
Cowling, who has led WH Smith since November 2019, offered to step down following an independent review by Deloitte, which blamed the problem in North America partly on a lack of oversight. He will stay on as an employee to the end of February to help with the handover of duties, WH Smith said Wednesday.
The change came as WH Smith set out a bigger hit to its North America profit than forecast. The retailer said in August an overstatement of about £30 million ($39.5 million) in its accounts would cut headline trading profit in the region to £25 million. It now expects profit of between £5 million and £15 million.
Shares of WH Smith rose as much as 1.8% in London, reversing a decline in early trading. They have not recovered from a plunge of more than 40% when the error was first announced.
Despite its long history in the U.K., WH Smith is increasingly focused on North America, where it has more than 320 stores under brands such as District Market, Flight Stop and Root & Branch.
'Target-driven'
Deloitte's review found a "target-driven performance culture" in North America and a "limited level of group oversight" of its finance processes, according to WH Smith. The company is reviewing its leadership team in the region.
WH Smith said the issue arose because it booked income from suppliers, which it gets from product promotions and rebates, earlier than it should have. It described the error as "substantially a timing rather than an existence issue," though it also warned that it expects adjustments to prior years' figures.
After the mistake was revealed former Chief Financial Officer Robert Moorhead, who left WH Smith in February, deferred his appointment to the board of bakery chain Greggs Plc until after the Deloitte review was completed. Current CFO Max Izzard joined WH Smith in September 2024 from Burberry Group Plc.
Founded in London in 1792, WH Smith sold its U.K. network of about 480 high street stores — known for books, newspapers, magazines and stationery — to investment firm Modella Capital this year. Its more lucrative travel division operates in major airports, hospitals and train stations around the world.
The board has begun a search for a new group CEO, WH Smith said, with the head of its U.K. division Andrew Harrison taking the role on an interim basis.
"Finding a new CEO won't be easy, given they'll need to rebuild credibility with the market the moment they walk through the door, rather than simply focusing on corporate strategy," said Dan Coatsworth, head of markets at AJ Bell.
