WH Smith plots board cull after blunder sparked £600m share massacre

WH Smith is set to shake up its board after the travel retailer was hit by an accounting scandal.

The company is already looking for a chief executive to replace Carl Cowling, who quit last month after a review found its US unit had improperly booked promotional revenues from suppliers early, boosting short-term profits.

News of the blunder, which went undetected for three years, saw more than £600 million wiped off WH Smith’s share price in one of the biggest one-day falls in stock market history.

WH Smith, which runs about 1,200 stores in airports and other travel hubs, has promised to strengthen its board by hiring one or more directors with experience of the key US market, which is its main focus for growth.

An announcement could come as early as this week, when the firm publishes its delayed annual results on Friday.

The company had originally planned to reveal the figures on November 12, but it was forced to delay them to December 16 and again to December 19 to allow more time for an investigation into flaws in its accounting systems.

Clawback: Former boss Carl Cowling may have to repay some of his £2.7million bonus to the travel retailer

Former group strategy director Huw Crwys-Williams was named boss of the North America division in June and its entire leadership team are also being reviewed.

But as one leading shareholder noted: ‘A Brit was running the US business and now it’s another Brit.’

What was needed were leaders with relevant US retail experience, the shareholder added.

‘You need the right management team and board.’

The review by accountancy firm Deloitte highlighted a ‘target-driven performance culture’ in the North American business with limited oversight of its finance procedures from WH Smith’s head office in Swindon.

Deloitte found that when suppliers agreed to pay WH Smith for their goods to be prominently displayed or discounted to boost sales in its US stores, these revenues were incorrectly booked at the time of the deal, not when the products were sold.

The review gave the rest of the business a clean bill of health.

WH Smith’s UK boss Andrew Harrison has taken charge until a permanent successor to Cowling is found.

The retailer is expected to post full-year profits of £110 million – £30 million lower than forecast before news of the accounting scandal broke.

Cowling and former finance director Robert Moorhead were paid £2.7 million and £1.9 million respectively last year – mostly in performance-related bonuses.

These may be clawed back by the board, which is headed by Annette Court, who used to run insurer Direct Line.