WH Smith shares plunge after profit warning
WH Smith shares slumped as much as 36pc, erasing around £500m from the retailer’s market value.
The company cut its financial forecasts and ordered an independent review after uncovering a £30m accounting error that led to profits being overstated.
The company now expects pre-tax profit for the year to 31 August to be about £110m, well below the £182.6m analysts had forecast as recently as April. The stock dropped nearly 36pc to 711p, making it the biggest faller on the FTSE 250.
WH Smith said a financial review uncovered a £30m overstatement of expected headline trading profit in North America, linked to the accelerated recognition of supplier income. Profits in the region are now forecast at £25m, down from £55m.
The group has appointed Deloitte to conduct an “independent and comprehensive review” of its accounts.
The 230-year-old retailer has sold its high street stores to investment firm Modella Capital for about £40m, after cutting the price by £12m due to worsening trading.
The high street arm, which employs around 5,000 staff, will be rebranded as TGJones, while WH Smith will continue to operate under its brand across its travel outlets in railway stations, airports and hospitals.
