What's happened
WH Smith's CEO Carl Cowling has stepped down following an independent Deloitte review revealing accounting errors in its North American division. The errors overstated profits by up to m, leading to a sharp share price decline and revised profit forecasts. Andrew Harrison is interim CEO as the company plans a recovery.
What's behind the headline?
The resignation of Carl Cowling underscores the severity of the accounting issues at WH Smith, which have significantly damaged investor confidence. The Deloitte review highlights systemic weaknesses in financial controls, especially in the US division, which was seen as a growth driver. The company's focus on travel retail suggests a strategic pivot, but the fallout from the accounting scandal will likely delay its recovery. The leadership change aims to restore trust, but the extent of the damage suggests that rebuilding credibility will take years. The share price decline reflects market concern over governance and future profitability, emphasizing the importance of robust oversight in multinational retail operations.
What the papers say
The Guardian reports that Cowling's resignation follows an investigation revealing overstated profits and weaknesses in controls, with the company now focusing on rebuilding trust and profitability. Sky News emphasizes the scale of the profit overstatement and the leadership upheaval, noting that Cowling's departure was a direct response to the Deloitte findings. The Independent highlights the systemic issues in the US division's finance team and controls, with the chairwoman apologizing and stressing the need for stronger governance. All sources agree that the scandal has caused significant financial and reputational damage, prompting leadership changes and strategic refocusing.
How we got here
WH Smith sold its high street business earlier this year and shifted focus to travel retail. An internal review uncovered accounting errors in its North American division, where income was recognized prematurely. Deloitte's investigation revealed weaknesses in controls and systems, leading to profit overstatements and a major share price drop.
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