The Financial Conduct Authority (FCA) has launched a formal investigation into high street and travel retailer WHSmith, following the discovery of a major accounting error within its North American operations.
Watchdog Scrutiny After Market Value Plummets
This new probe by the city watchdog comes after WHSmith disclosed in August that accounting failures in its US division had led to profits being overstated by as much as £50 million. The revelation triggered a dramatic fall in the company's share price, erasing nearly £600 million from its market value in a single day.
The FCA confirmed the investigation in a statement, saying it concerns "potential breaches of UK Listing Principles and Rules and Disclosure and Transparency Rules" related to the matters WHSmith announced on 19 November 2025.
Leadership Fallout and Business Restructuring
The accounting scandal has already precipitated significant changes at the top of the company. Chief Executive Carl Cowling, who had led the firm for six years, resigned in the wake of an independent review conducted by Deloitte.
At the time of his departure, Cowling stated: “Whilst the issues identified in the Deloitte review arose in our North American division, I recognise the seriousness of this situation and as Group CEO feel it is only right that I step down.”
This regulatory investigation follows another major corporate move by WHSmith earlier this year. In June, the company sold its entire UK high street retail business to private equity firm Modella Capital, shifting its focus more heavily towards its travel outlets.
Ongoing Reviews and Future Forecasts
In the aftermath of the accounting problems, WHSmith is conducting a review of its North American businesses, which includes its InMotion chain selling tech accessories in airports. Interim boss Andrew Harrison has acknowledged the challenge ahead, telling investors: "The Board and I are acutely aware that we have much to do to rebuild confidence in WH Smith and deliver stronger returns."
According to a Sky News report on 19 December, the company now expects profitability for the next year to be static compared to 2025 financial year levels as it deals with the fallout.
The Deloitte review identified "shortcomings" that exaggerated supplier income, leading to the significant profit overstatement and subsequently much lower profit forecasts. The firm now faces a rigorous FCA investigation as it attempts to stabilise and restore trust with the market.
