The boss of WH Smith has stepped down with immediate effect after a damning independent audit report by Deloitte found flaws in the operations of the firm’s North America division.
The Deloitte review found “insufficient systems, controls and review procedures for supplier income across commercial and finance functions” as well as “weaknesses in the composition of the finance team” and inconsistent accounting practices in the North America division.
The review was commissioned after WH Smith identified a major accounting misstatement, an admission which wiped tens of millions of pounds from its profits, causing shares to tumble.
The FTSE 250 firm said a “financial review” identified an overstatement of around £30m of expected headline trading profit in its North America division that was “largely due to the accelerated recognition of supplier income” in the country.
As a result the firm confirmed profit in North America would be revised down to £25m from previous market expectations of £55m, cutting overall headline profit to £110m.
The stock is down by almost 50 per cent since the start of the year.
“Whilst the issues identified in the Deloitte review arose in our North American division, I recognise the seriousness of this situation and as Group CEO feel it is only right that I step down from my position,” chief executive Carl Cowling said in a statement.