WH Smith Postpones Annual Results Amid Accounting Review
WH Smith has announced a delay in the release of its annual financial results, citing the need for further time to complete necessary audit procedures. The retail giant, known for its presence in travel hubs, now anticipates unveiling its latest figures on Friday, a shift from the initially scheduled Tuesday release.
This postponement is attributed to the ongoing audit process, with the company stating that the extension will allow auditor PwC “further time to complete the required audit procedures.” This marks the latest in a series of setbacks for the financial reporting, which was originally slated for publication on November 12th.
The accounting irregularities have cast a shadow over the company’s recent performance, leading to significant leadership changes and revised financial projections.
Leadership Shake-up and Profit Overstatement
The accounting issues have already prompted a change at the top. Last month, Carl Cowling resigned as chief executive. This decision followed an independent review conducted by Deloitte, which uncovered a number of “shortcomings” within the group’s financial reporting. A key finding of this review was that profits in the company’s US business had been overstated by as much as £50 million.
This revelation has had a tangible impact on the company’s market valuation and future outlook.
Impact on Share Price and Profit Forecasts
WH Smith, which has recently divested its High Street stores to concentrate on its travel retail operations, first disclosed the existence of accounting issues back in August. The news sent shockwaves through the market, with the company’s shares experiencing a significant tumble.
The shares plummeted by nearly 40 per cent after the company discovered that its trading profit in North America had been overstated during a review of its financial statements.
In response to these findings, WH Smith was forced to significantly slash its profit forecasts. The company has warned that its US arm is now expected to generate a profit of between £5 million and £15 million for the delayed full-year results. This figure represents a dramatic reduction from the initial expectation of £55 million, and even a substantial decrease from the £25 million forecast that was issued after the accounting issue first came to light.
The ongoing scrutiny and the need for a thorough audit underscore the seriousness of the accounting discrepancies and their potential implications for investor confidence. The company’s focus on travel retail is a strategic move to adapt to evolving consumer habits, but these financial headwinds present a considerable challenge as it navigates this transition. Investors will be closely watching the updated financial report for a clearer picture of the company’s true financial health and the steps being taken to rectify the accounting errors.
