WHSmith accounting scandal ripples to Greggs boardroom
WHSmith’s board has reaffirmed its support for chief executive Carl Cowling as the retailer faces the fallout from a £30 million accounting error that has already erased nearly £600 million from its market value.
At the same time, the scandal has prompted Greggs to delay the appointment of WHSmith’s former CFO, underscoring how governance concerns can quickly spread beyond a single company.
The accounting issue stemmed from supplier income that was recognized too early in WHSmith’s North American travel division. The misstatement forced the company to cut divisional profit expectations for the year to August from £55 million to £25 million, with group pre-tax profit guidance reduced to £110 million.
The disclosure sent WHSmith shares plunging by more than 40 percent on August 21 — the steepest one-day drop since 2008 — wiping out more than half a billion pounds in market capitalization. Despite the setback, the board has stood by Cowling, who has led the company since 2019. Major shareholder Causeway Capital also increased its stake to nearly 16 percent following the announcement, signaling investor confidence in existing leadership.
The repercussions have already extended beyond WHSmith. Greggs confirmed this week that the planned appointment of Robert Moorhead, WHSmith’s former CFO and COO, as a non-executive director and chair of its audit committee has been postponed. Moorhead, who left WHSmith in late 2024 after 16 years in senior roles, was set to join Greggs in October. His appointment will now wait until the Deloitte investigation into WHSmith is complete.
In the meantime, Greggs said its current audit chair, Kate Ferry, will remain in the role, limiting immediate disruption but highlighting how reputational risk is shaping governance decisions across UK boardrooms.
Deloitte has been tasked with conducting a forensic review of WHSmith’s accounts. The investigation, expected to take six to eight weeks, will report alongside the company’s full-year results in November. A critical question is whether the £30 million misstatement is confined to the past year or whether earlier reporting may also be affected.
Reports have suggested that parts of WHSmith’s U.S. operations, acquired through deals such as InMotion and Marshall Retail Group, relied heavily on spreadsheets, raising concerns about the robustness of financial controls during a period of rapid international expansion.
The case highlights both the fragility of investor confidence when accounting credibility is questioned and the speed with which reputational risk can spread across the corporate landscape. While WHSmith’s future growth strategy now depends heavily on its U.S. travel retail business, restoring trust in its financial oversight is likely to be just as important.
For Greggs, the decision to postpone Moorhead’s appointment signals caution: until the Deloitte findings are public, any direct association with WHSmith’s financial governance is seen as a risk.
The outcome of the review will be pivotal not only for WHSmith’s leadership but also for broader debates around corporate oversight in companies undergoing rapid international growth.