Incoming WH Smith boss plots US retailer overhaul

The new boss of WH Smith is to conduct a wide-ranging review of the travel retailer that will have its troubled US unit in its sights, The Mail on Sunday understands.

Turnaround veteran Leo Quinn is preparing to take charge of the chain as it reels from of an accounting scandal that saw its share price nearly halve in a day.

WH Smith is under investigation by City watchdog the Financial Conduct Authority after profits in its US division were overstated by £30 million when income from suppliers was booked early. Sales that should have been allocated to later years were recorded as soon as promotional deals were done.

Quinn, who starts as executive chairman in April, has been parachuted in to sort out the mess after reviving construction giant Balfour Beatty. The focus of his strategic review will be on the US business, which was built up by a series of acquisitions, a source familiar with his thinking said. The deals gave WH Smith more than 300 stores in airports and resorts like Caesars Palace in Las Vegas, but ‘they haven’t worked out’ and ‘need to be scaled back’.

Under scrutiny: The new boss of WH Smith is to conduct a wide-ranging review of the travel retailer

The source added: ‘He’s going to need time, but Leo is the right person. The company needs real leadership at management and board level. He’ll do a great job.’

Quinn’s appointment is likely to take some of the sting out of tomorrow’s annual meeting.

But auditor PwC remains in the firing line for signing off WH Smith’s accounts before the scandal was uncovered.

‘PwC is on a very sticky wicket,’ said Richard Marwood, head of UK equities at life insurer and investment firm Royal London.

Shareholder advisory group Pirc has urged investors to vote against re-electing PwC, the firm’s auditor for more than ten years – contrary to best practice.

The accounting regulator, the Financial Reporting Council, may launch its own inquiry into PwC.

Quinn’s appointment – and bonus package of up to £25 million if his turnaround succeeds – will be voted on at a separate meeting.