WH Smith will try to claw back up to £7 million in bonuses from former executives after it said the UK financial watchdog had launched a formal investigation into a damaging accounting error linked to its US business.
Nearly £600m was wiped off the retailer’s market capitalization books overnight in August after it identified errors in calculating supplier income and an allowance for lost stock dating back to 2023 at its North American arm.
Last month, its chief executive, Carl Cowling, resigned in the wake of the scandal.
The company said on Friday it would “implement clawbacks and clawbacks to claw back excess bonuses” from Cowling and her former CFO Robert Moorhead, following an earnings restatement in its 2023 and 2024 fiscal years.
Together, Cowling and Moorhead – who left last year – received just over £7m in bonuses and long-term share awards for those years.
Cowling received £4m in bonuses and long-term share incentives during this period, while Moorhead received just under £3m.
It is unclear how much of those rewards the company will attempt to recover.
She confirmed that the Financial Conduct Authority in the United Kingdom had begun a formal investigation into the company’s compliance with the UK’s listing, disclosure and transparency rules, after it emerged last month that it had begun conducting investigations.
Andrew Harrison, the retailer’s interim chief executive, said the company had now put in place a “clear remediation plan” to “strengthen governance and controls to protect value and restore trust” supported by new systems.
He said the group is also working to streamline its North American division, exiting unprofitable fashion and specialty stores, which it operates under brands such as Misora and Marshall Rosso in holiday resorts. It is also reviewing InMotion’s retail portfolio in North America.
“It has been a difficult end to the year for the group. The board and I are fully aware that we have a lot to do to rebuild confidence in WH Smith and deliver stronger returns as we move forward,” Harrison said.
The comments came as WH Smith revealed that pre-tax profits for the year ending August 2025 were just £16m, after £92m of one-off costs, down from £73m the previous year. Sales rose 5% to £1.5bn.
The newspaper, book and stationery chain cut its financial forecasts in August and launched an independent review led by Deloitte after the accounting error was discovered.
The revelation came just a few months after the chain sold its high street business, which has since been rebranded as TGJones by its new owners. WH Smith identified North America as a growth opportunity with its new focus on its branches in airports and railway stations.
A Deloitte review found that profits in the division were overstated by as much as £50m.
The Financial Supervision Authority confirmed on Friday that it had opened an investigation into WH Smith.