WHSmith has reduced its annual profit outlook following a financial review identifying that earnings had been overstated in its North America division.
The review found an overstatement of £30m ($40.34m) in expected headline trading profit for North America, primarily because the accelerated recording of supplier income for the division.
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The UK traveller retailer now expects headline trading profit from the North America division to be £25m for the financial year ending 31 August 2025, as against previous market expectations of £55m.
The group therefore anticipates full year headline profit before tax and non-underlying items to be £110m for the division.
The company has instructed Deloitte to carry out an independent and thorough review.
WHSmith will provide a further update at its preliminary results announcement.
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By GlobalDataAfter divesting its UK high street business in June to focus solely on travel retail, WH Smith has seen significant growth in North America. The region accounted for 20% of the group’s revenue in fiscal 2024.
Despite this expansion, the company faces challenges due to increasing debt levels that have strained its cash reserves. These financial pressures are further exacerbated by the global economic uncertainty impacting the travel industry, as reported by Reuters.
WH Smith posted a 7% increase in global travel revenue on a constant currency basis for the 13 weeks leading up to 31 May 2025.
The company’s travel divisions – the UK, North America and Rest of the World – have all contributed to this positive outcome, with respective local currency and like-for-like growth figures showcasing the brand’s expanding footprint.
