WH Smith shares tumble after £30 million accounting error
The London-listed travel retailer warned its yearly profits will be lower than previously expected
WH Smith has warned its yearly profits will be lower than expected due to an accounting error in the US.
Shares in the London-listed travel retailer were down by about a third on Thursday morning.
WH Smith said it discovered its trading profit in North America had been overstated by about £30 million when reviewing its finances.
The error related to how it calculated the amount of supplier income it received, leading it to be recognised too early.
The retailer is now expecting a trading profit for the US of about £25 million for the year to August – a cut from the previous £55 million forecast.
As a result, the company lowered its outlook for annual pre-tax profits to around £110 million.
The London-listed business incorporates its travel locations, such as shops in airports, train stations and hospitals, which total about 1,300 around the world. Whereas the high street chain of about 480 shops was sold to Hobbycraft owner Modella Capital in June.
As part of the deal, the WH Smith name will disappear from British high streets and be replaced by the brand, TGJones.
The travel locations were not included in the sale and will not be changing.
WH Smith shares were down by about 35 per cent in early trading on Thursday.