WH Smith is seeking to claw back up to £7m in bonuses from former senior executives after disclosing that the UK’s financial watchdog has opened a formal investigation into a major accounting failure linked to its US operations.
The retailer saw nearly £600m wiped off its market value overnight in August after uncovering long-running errors in the way supplier income and provisions for lost stock had been accounted for in its North American business, dating back to 2023.
The fallout from the scandal led to the departure of chief executive Carl Cowling last month, with the company now searching for a permanent successor.
On Friday, WH Smith said it would be “applying malus and clawback” provisions to recover overpaid bonuses from Cowling and former finance director Robert Moorhead following the restatement of profits for the 2023 and 2024 financial years.
Between them, the two executives received just over £7m in bonuses and long-term share awards across the period. Cowling earned around £4m, while Moorhead, who left the business last year, received just under £3m. It remains unclear how much will ultimately be recovered, though it is understood to be likely less than half.
The company also confirmed that the Financial Conduct Authority has launched a formal probe into WH Smith’s compliance with UK listing, disclosure and transparency rules, following initial inquiries that became public last month.
Andrew Harrison, the retailer’s interim chief executive, said a “clear remediation plan” was now in place to strengthen governance and controls, supported by new systems designed to protect value and rebuild trust.
He said the overhaul would extend across the entire group, not just the US business, and would include changes to policies and processes, culture, training and oversight.
A review by advisory firm Deloitte partially attributed the accounting problems to a “target-led culture” within the North American division. Harrison said that while WH Smith would continue to set targets, it would also encourage staff to raise concerns more freely.
He added that the group was simplifying its US operations, with plans to exit around 40 loss-making fashion and speciality stores operated under brands such as Misura and Marshall Rousso at holiday resorts. The company is also reviewing its InMotion technology retail portfolio, which could see about 25 of its 124 outlets closed, though some locations may be converted to alternative formats rather than shutting altogether.
