UK/USA. WHSmith shares continue to trade around one-third down on last week’s levels as shareholders await updates on the fallout from an accounting error related to the travel retailer’s profitability in North America.
On 21 August, the company said it had identified an overstatement of around £30 million (US$40 million) of expected headline trading profit in North America, as it prepared year-end results for the financial year ending 31 August.
That prompted a same-day -42% slump in the share price, which has recovered only partially. WHSmith shares were trading today at £6.96 per share, around -33% down on Wednesday a week ago.
The board has instructed Deloitte to undertake an independent and comprehensive review and said it will provide a further update at its preliminary results announcement.
WHSmith said the overstatement was “largely due to the accelerated recognition of supplier income in the North America division”.
The group said it now expects headline trading profit from the North America division for the financial year to be around £25 million, down from previous market expectations of about £55 million.
As a result, full-year headline profit before tax and non-underlying items will be in the region of £110 million. ✈
