High street stalwart WH Smith has confirmed it will forcibly recover overpaid bonuses from former senior leaders, following a significant accounting error within its American operations that has now attracted the scrutiny of the UK's financial regulator.
Investigation and Executive Fallout
The Financial Conduct Authority (FCA) has opened a formal investigation into the matter, the company stated on Friday. This probe stems from an internal review which found that profits at WH Smith's North American travel business had been overstated by as much as £50 million due to failures in its audit process.
The discovery led to the delay of its annual results, which were pushed back twice from the original publication date of 12 November. The accounting issues also precipitated the resignation last month of the group's chief executive, Carl Cowling, after a report by Deloitte confirmed the scale of the problem.
Bonus Clawback and Remediation Plan
In response, the WH Smith board is now applying "malus and clawback" provisions to reclaim performance-linked bonuses previously awarded to former executive directors. This process allows a firm to reduce, cancel, or demand repayment of bonuses after financial results have been formally restated.
Reporting the delayed annual results, interim boss Andrew Harrison acknowledged a challenging period. "It has been a difficult end to the year for the group," he said. "The board and I are acutely aware that we have much to do to rebuild confidence in WH Smith and deliver stronger returns as we move forward."
The retailer has initiated a comprehensive remediation plan aimed at strengthening financial controls and governance. This plan focuses on aligning processes across the group and driving cultural change through enhanced training and monitoring. The board is concurrently searching for a permanent group chief executive.
Financial Performance and Future Strategy
Despite the turmoil, the slimmed-down business – which now focuses solely on its 1,300 travel location shops in airports and train stations globally – reported underlying figures. It achieved a pre-tax profit of £108m for the year to the end of August, excluding one-off costs, with group sales rising 5% to £1.6bn.
Its US trading profit was £15 million for the period. The company also revealed plans for its biggest ever store revamp programme in 2026, shifting to a "one-stop-shop" format that will combine travel essentials, food-to-go, and health and beauty products, albeit with some short-term disruption.
This restructuring follows the sale of its UK high street chain of roughly 480 shops to Modella Capital, owner of Hobbycraft, in June. As part of that deal, the WH Smith name is vanishing from British town centres, being replaced by the brand TGJones.
