WH Smith has warned its yearly profits will be lower than previously expected due to an accounting error in the US, sending its share price tumbling.
WH Smith has warned its yearly profits will be lower than previously expected due to an accounting error in the US, sending its share price tumbling.
Shares in the London-listed travel retailer were down by about a third on Thursday morning.
WH Smith said it discovered its trading profit in North America had been overstated by about £30 million, when reviewing its finances.
This was because of an issue in how it calculated the amount of supplier income it received – leading it to be recognised too early.
It means the group is now expecting a trading profit for the US of about £25 million for the year to August – a cut from the previous £55 million forecast.
As a result, the company lowered its outlook for annual pre-tax profits to around £110 million.
The London-listed business incorporates its travel locations, such as shops in airports, train stations and hospitals, which total about 1,300 around the world.
Whereas the high street chain of about 480 shops sold to Hobbycraft owner Modella Capital in June.
As part of the deal, the WH Smith name will disappear from British high streets and be replaced by brand TGJones.
The travel locations were not included in the sale and will not be changing.
WH Smith shares were down by about 35% in early trading on Thursday.
This article was written by Anna Wise from The Evening Standard and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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