WH Smith tanks after profit warning
By Michele Maatouk
Date: Thursday 21 Aug 2025
(Sharecast News) - Shares in WH Smith tumbled on Thursday after the retailer cut its profit outlook, having uncovered an overstatement of around £30m of expected trading profit in North America.
For the year to the end of August, the group now expects headline trading profit from the North America division to be about £25m, down from previous market expectations of approximately £55m.
As a result, full-year headline profit before tax and non-underlying items will be in the region of £110m, it said.
The company, which has instructed Deloitte to undertake an independent and comprehensive review, said the overstatement is mainly due to "the accelerated recognition of supplier income" in the North America division.
"The group will provide a further update at its preliminary results announcement," it said.
At 0940 BST, the shares were down 37% at 695p.
Dan Coatsworth, investment analyst at AJ Bell, said: "The latest update from WHSmith is nothing short of a disaster. The North American business is crucial to the company's growth ambitions and the loose thread of an accounting error in this part of the group will create concern about a potential greater unravelling to come.
"The business has identified an overstatement of profit linked to the accelerated recognition of supplier income. Uncertainty will dog the company until an independent review is concluded - with an update promised alongside full year results.
"Profit guidance for the American division has been cut by more than 50%, which will cause huge embarrassment to management. Investors will be sobbing into their cornflakes on the news.
"The sale of the structurally declining UK high street division was supposed to free WHSmith to concentrate on its airport, train, hospital and service station outlets. These benefit from a captive audience allowing the company to generate strong margins. However, the US news has tarnished what WHSmith would have hoped could be a fresh start for the business.
"It needs to get ahead of this situation as quickly as possible and make the necessary changes to rebuild credibility with the market."
Susannah Streeter head of money and markets at Hargreaves Lansdown, said: "Shareholders have been left reeling by this damaging accounting error. Shares have plunged more more than a third, reflecting the shock mistake and the big recalculation in annual profits for the year.
"Getting it so wrong is not a good look and affects for reputation of the company. What investors want to see is sound financial management, and errors of this kind shake confidence in future guidance. It's particularly bruising for WH Smith given that it has its sights set on global expansion, with the US market a big part of its plans. This hasty recalculation of its current opportunities demonstrates it's not in such a strong position as hoped to progress its vision."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN