28/08/2025
WHSmith stands by CEO as accounting scandal reverberates across UK boardrooms
The aftershocks of WHSmith’s £30m accounting error are now being felt beyond the retailer’s own boardroom.
This week, the company’s directors offered their full backing to chief executive Carl Cowling, even as a Deloitte probe gets under way into the misstatement.
At the same time, Greggs has quietly deferred the appointment of WHSmith’s former long-serving finance chief, a move that underlines the reputational damage already spreading from the scandal.
A board under pressure
For WHSmith, the discovery of prematurely booked supplier income in its North American travel division forced a sharp correction: divisional profit expectations for the year to August were cut in half, from £55m to £25m, dragging group pre-tax profit forecasts down to £110m.
The market reaction was immediate and severe. On 21 August, shares tumbled 42% in a single session, wiping nearly £600m from the company’s value and marking the steepest one-day fall since the financial crisis.
Yet, in a sign of confidence in the current strategy, the board has chosen to back Cowling. The chief executive, who has led WHSmith since 2019 and overseen its transformation into a travel-focused retailer, continues to enjoy the support of its largest shareholder, Causeway Capital, which increased its stake to almost 16 per cent last week.
The Greggs connection
The crisis has also raised questions for Greggs, which had planned to bring former WHSmith CFO and COO Robert Moorhead onto its board in October as a non-executive director and chair of the audit committee.
With Deloitte now combing through WHSmith’s books, Moorhead and Greggs have agreed to delay his appointment until the review is concluded.
In practice, that leaves Greggs with continuity — existing non-executive director Kate Ferry will continue as audit chair — but it also signals how seriously UK boards are weighing reputational risk in light of corporate accounting missteps.
The investigation
Deloitte’s independent review is expected to take six to eight weeks, with results scheduled for November alongside WHSmith’s full-year figures.
The key question is whether the £30m overstatement is confined to the most recent financial year, or whether problems stretch further back. The company’s auditor, PwC, will also be under scrutiny as the findings are assessed.
Reports suggest that parts of WHSmith’s U.S. division have been relying heavily on spreadsheets, an uncomfortable detail given the pace of expansion there through acquisitions such as InMotion and Marshall Retail Group.
The review will likely shed light on whether those internal controls were fit for purpose as the group pivoted away from its UK high street business — sold to Modella Capital this summer — to pursue higher growth in international travel retail.
What it means for corporate governance
The WHSmith episode illustrates how quickly confidence can unravel when accounting credibility is in question.
For investors, the immediate concern is the accuracy of current and historical reporting. For other UK boards, the lesson is that accounting failures travel fast: Moorhead’s deferred appointment at Greggs shows how a single scandal can affect governance decisions well beyond the company at its centre.
The outcome of Deloitte’s investigation will be pivotal. If the misstatement proves isolated, Cowling’s strategy may retain shareholder support. But if wider weaknesses are uncovered, WHSmith could face renewed pressure over governance and oversight at a time when it can least afford it.
