WH Smith Chief Executive Departs Following Damning US Accounting Probe
The chief executive of British retail giant WH Smith has resigned with immediate effect after an independent investigation uncovered serious accounting deficiencies within the company's North American operations.
Carl Cowling stepped down from his position following a scathing review by Deloitte that revealed insufficient systems, controls and review procedures for supplier income across commercial and finance functions in the retailer's North America division.
Financial Misstatement Uncovered
The investigation was launched after WH Smith discovered a major accounting misstatement that ultimately wiped tens of millions of pounds from its profits and sent shares tumbling dramatically.
The FTSE 250 company confirmed that a financial review had uncovered an overstatement of approximately £30m in anticipated headline trading profit within its North America division. This was largely attributed to the accelerated recognition of supplier income in the region.
As a result, the firm announced that profit in North America would be revised downwards to £25m from earlier market forecasts of £55m, reducing overall headline profit to £110m according to City AM reports.
Market Impact and Leadership Fallout
The accounting revelation has had devastating consequences for the company's market value, with shares falling by nearly 50 per cent since the beginning of the year.
In his resignation statement, Carl Cowling acknowledged the seriousness of the situation, stating: "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 from my position."
Market analysts were equally blunt in their assessment. Dan Coatsworth, head of markets at AJ Bell, commented: "No chief executive is going to survive an episode as catastrophic as the one that wiped £594 million off the value of WH Smith overnight."
Coatsworth added that Cowling's credibility had been shattered by the scale of value destruction, particularly following the strategic shift away from the UK high street business that was meant to define the company's future direction.
The Deloitte assessment also highlighted weaknesses in the composition of the finance team and inconsistent accounting practices within the North America division, painting a picture of systemic failures in the company's financial controls.
