WH Smith Cuts North America Profit Forecast After £30m Accounting Overstatement

WH Smith has lowered its profit forecasts for the fiscal year ending August 31 after discovering an overstatement of around £30 million ($40 million) in its North America division's trading profits. The overstatement was primarily due to the accelerated or premature recognition of supplier income, which should have been accrued over time as a reduction in cost of sales. As a result, the North America division's headline trading profit is now expected to be approximately £25 million, down from earlier market expectations of about £55 million. The group's full-year headline profit before tax and non-underlying items has also been revised down to around £110 million. WH Smith has engaged Deloitte to conduct an independent and comprehensive review of the accounting irregularity, with further details expected at the preliminary results announcement in November. The company continues to focus on its travel retail operations globally following the sale of its UK high street business earlier this year.