Greggs has delayed the board appointment of WH Smith’s former CFO Robert Moorhead after the travel retailer launched an investigation into a recent accountancy scandal that wiped almost £600m off its market value.
Last week, WH Smith revealed a £30m black hole in its North American profits, which it said was discovered during the preparation of its recent accounts.
The announcement blindsided investors and sent its stock plummeting by 42% to a 12-year low.
Greggs said, in light of the news, Moorhead asked to defer his appointment until an independent review exploring the accounting irregularities currently being conducted by Deloitte is completed. He was due to start on 1 October as a non-executive, joining Greggs’ audit committee.
In the interim, Kate Ferry will remain as a non-executive director and will continue to chair the audit committee
Moorhead joined WH Smith in 2004 as finance director of retail before taking up the CFO role in 2008 and joining the board in 2013, before retiring in November 2024.
Retail analyst Nick Bubb said that while “fingers were pointed at the role of the current CFO, Max Izzard” after the news first emerged, he had only been in place for less than year.
The investigation by Deloitte will determine whether the error relates only to last year’s accounts or if profits in prior years were also inflated.
WH Smith expects it to take between six and eight weeks, enabling it to present the outcome alongside its full-year results in November.
WH Smith’s board is reportedly opting to stand by CEO Carl Cowling for now, despite pressure from several investors, according to a story in The Financial Times today (28 August).
Cowling has placed the US travel business division at the centre of his new strategy for the group, which included selling off its high street business to private equity firm Modella Capital earlier this year.
AJ Bell investment analyst Dan Coatsworth called last week’s news “nothing short of a disaster”.
“The North American business is crucial to the company’s growth ambitions and the loose thread of an accounting error in this part of the group will create concern about a potential greater unravelling to come.”
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