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WH Smith will try to take back as much as £7m in bonuses from former executives after it said the UK’s financial watchdog had launched a formal investigation into a devastating accounting error linked to its US business.
Almost £600m was wiped off the books to paperclips retailer’s stock market value overnight in August after it identified errors with accounting for supplier income and provision for lost stock going back to 2023 in its North American arm.
Last month its chief executive, Carl Cowling, stepped down in the wake of the scandal.
On Friday the company said it would be “applying malus and clawback to recover overpaid bonuses” from Cowling, and its former finance director Robert Moorhead, after the restatement of profits in its 2023 and 2024 financial year.
Together, Cowling and Moorhead – who left last year – received just over £7m in bonuses and long-term share awards for those years.
Cowling took home £4m in bonuses and long-term share incentives over the period, while Moorhead received just under £3m.
It is unclear how much of those bonuses the company will attempt to recover.
It confirmed the UK’s Financial Conduct Authority had launched a formal investigation into the company’s compliance with UK listing, disclosure and transparency rules, after it emerged last month it had begun making inquiries.
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 was also simplifying its North American division, exiting its unprofitable fashion and speciality stores, which it runs under brands such as Misura and Marshall Rousso on holiday resorts. It is also reviewing its North American InMotion technology retail portfolio.
“It has been a difficult end to the year for the Group. The board and I are acutely aware that we have much 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 to August 2025 were just £16m, after £92m of one-off costs, down from £73m a year before. Sales rose 5% to £1.5bn.
The newspaper, books and stationery chain cut financial forecasts in August and launched an independent review led by Deloitte after it discovered the accounting blunder.
The revelation came only a few months after the chain sold its high street business, which has since been rebranded as TGJones by its new owners. WH Smith had identified North America as a growth opportunity in its new focus on its branches in airports and railway stations.
The Deloitte review found profits at the division had been overstated by as much as £50m.
The FCA confirmed on Friday it had opened an investigation into WH Smith.
