WH Smith forecasts sharp profit drop amid trading pressures

Retailer WH Smith has issued a profit warning, stating that annual underlying pre-tax profits are expected to fall to approximately £75 million for the year ending August 31. This represents a significant decrease from the £108 million reported in 2024-25 and sits at the bottom of previous forecasts.

The company attributed the downbeat outlook to inflation headwinds, increased promotional activity, and reduced brand marketing. This follows a period of instability for the retailer, which recently admitted to overstating profits in its North American division by up to £50 million due to audit process issues.

As a result of these accounting discrepancies, the Financial Conduct Authority is investigating the firm, and the UK’s accountancy watchdog has launched an inquiry into PwC regarding its auditing of the company. Despite these challenges, WH Smith reported a 2% rise in like-for-like sales, supported by a recovery in airport sales and an 8% jump in hospital site sales.