By Aimee Look

WH Smith said the U.K. Financial Conduct Authority has opened an investigation into the company over potential breaches of U.K. listing principles, disclosure and transparency rules.

The FTSE 250-listed company--which sells stationary, books and magazines in airports and train stations--made the disclosure Friday alongside its fiscal 2025 earnings, which had been delayed after an accounting review identified issues at its North America unit, and lead to the resignation of Chief Executive Carl Cowling.

WH Smith said it was cooperating fully with regulators and any other authorities over the investigation related to the North America accounting issue. Separately, the FCA confirmed it had started an investigation into the company, but didn't disclose any further information.

A review into the North American business conducted by Deloitte and covering the period from fiscal 2023 to 2025 identified that the accounting treatment for supplier income wasn't consistent with the group's policy.

The review also pointed to an overstatement of supplier income recognition, the company said on Nov. 19. It also said on that date that CEO Cowling was resigning.

"Whilst the issues identified in the Deloitte review arose in our North American division, I recognize the seriousness of this situation and as group CEO feel it is only right that I step down from my position," Cowling said at the time.

The company said Friday that the board continues with its search for a group CEO and two nonexecutive directors to strengthen the board with one area of focus being North America retail experience.

The company also said that a comprehensive remediation plan is in place and progressing at pace following the review.

WH Smith reported an adjusted pretax profit for the year ended Aug. 31 of 108 million pounds ($144.5 million), the top end of its previously-provided 100 million to 110 million pounds range guidance. This compares with 114 million pounds for the comparable period a year earlier.

It expects to report adjusted pretax profit for fiscal 2026 of between 100 million pounds and 115 million pounds.

Headline trading profit--a company preferred metric--was 159 million pounds compared with 170 million pounds. Within this the North American unit produced 15 million pounds compared with 34 million pounds.

Revenue for the group rose 5% to 1.55 billion pounds for the fiscal year. WH Smith said that like-for-like revenue for the first 15 weeks of fiscal 2026 was up 3%.

"It has been a difficult end to the year for the group," interim Chief Executive Andrew Harrison said. "We have much to do to rebuild confidence in WH Smith and deliver stronger returns as we move forward."

WH Smith proposed a final dividend of 6.0 pence per share, which brings its full year dividend to 17.3 pence.

Shares were down 24.50 pence, or 3.6%, at 660.50 pence. They are currently down 44% over the year to date.

Write to Aimee Look at aimee.look@wsj.com

(END) Dow Jones Newswires

December 19, 2025 04:08 ET (09:08 GMT)

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