WH Smith has reported a 30% fall in underlying pre-tax profits to £76 million for the year to August 31, as its new boss blamed past "forced growth" for leaving the group with increasing costs and too many loss-making stores.
The retailer's executive chairman, Leo Quinn, who took on the top job in April, said the group was accelerating a turnaround as part of a "fundamental reset" of the business.
Turnaround plan and financial results
Under Mr Quinn's leadership, WH Smith is speeding up an overhaul that began at the end of last year after a major accounting error in its US division. That error sent its shares plunging amid a raft of profit warnings and sparked an investigation by the Financial Conduct Authority (FCA).
The firm raised £103 million in June through an equity raise to bolster its balance sheet and help drive investment plans.
Despite like-for-like revenues rising 2%, the company swung to a £107 million statutory pre-tax loss from £2 million in profits, hit by impairments, write-downs and restructure costs totalling £164 million.
Boss blames 'forced growth'
Mr Quinn said the group had launched a "fundamental reset" over the past year to reverse its fortunes.
He said: "Over the last few months, we have undertaken a detailed analysis of the group's strategy and recent historical performance.
"It is clear from this that forced growth delivered a complex and siloed group structure without scalable benefits.
"This resulted in increased costs, too many loss-making stores, acquisitions not integrated effectively and high organisational complexity."
Restructuring and outlook
The overhaul cost the group £41 million in the past financial year as it looks to reshape its US store base and scale back other international operations to focus on three countries – Ireland, Spain and Australia.
WH Smith has not said how much will be saved in annual costs from the turnaround, nor has it revealed if there will be any impact on jobs.
The group sold its UK high street shops to private equity firm Modella Capital last year to focus on its chain based largely at travel locations in Britain and globally.
WH Smith said it is on track with expectations for underlying pre-tax profits of between £75 million to £85 million in 2026-27, but added that it "continues to plan cautiously given the ongoing macroeconomic uncertainty". Shares fell 7% in morning trading on Thursday.
