WH Smith PLC (LSE:SMWH) has been forced to pull some food products from its shelves as another food manufacturer recalled products over E. coli fears.
The manufacturer, a plant-based food producer called THIS!, recalled its plant-based 'chicken and bacon' wrap, according to the Food Standards Agency (FSA), which is only sold at Smiths stores.
Removal of the product by the producer was a "precautionary step...because of possible contamination with E. coli", the FSA said in a news alert, adding that E. coli "has not been detected in the product but it is being recalled as a precaution".
Last week two other suppliers, FTSE 250-listed Greencore Group PLC (LSE:GNC) (Greencore Group PLC (LSE:GNC)) and Yorkshire-based Samworth Brothers Manton Wood, recalled dozens of other sandwiches, wraps and salads sold in various supermarket chains.
Salad leaves were seen as the possible E Coli risk in those recalls, with over 200 people across the UK reported to have been affected by Shiga toxin-producing E. coli (STEC) in recent weeks, with four out of 10 admitted to hospital.
E. coli can cause symptoms including severe diarrhoea, abdominal pain, and sometimes a serious condition that can lead to kidney failure, which can be fatal.
Greencore has recalled 45 different products so far sold at Sainsbury's, Asda, Aldi, Morrisons, Co-op, Boots and Amazon.
No bacteria had been found in the products themselves but the company decided to recall them as a precaution "because of possible contamination with E.coli".
If the current outbreak is linked to sandwiches, then "the most likely problem is contaminated ingredients" and the most likely ingredients would be leafy salads or sprouted seeds, according to Prof Paul Hunter at the University of East Anglia (UEA), who has studied such outbreaks.
Though E. coli was only rarely detected in the product, the most commonly identified reason that the product had been contaminated was contaminated water during growth, harvesting or processing.
Analyst Russ Mould at AJ Bell said WH Smith is the latest company on the stock market to be dragged into the E.coli outbreak.
"Worst case scenario is that the health outbreak struggles to be contained and more people get ill, leading to growing fears about buying ready-made wraps and salads," he said.
"However, precautionary measures to get potentially contaminated food items off the shelves could curb the problem and hopefully the root cause is quickly identified and the issue eradicated.
"From an investment perspective, a lot of bad news has already been priced into Greencore, more so than the retailers because it is a food supplier and has more to lose."
Greencore shares fell 6% last week, the bulk of which was on Friday when the company was named as one of the suppliers of products being recalled from shops.
“Despite all the negative headlines over the weekend around the E.coli outbreak, both Greencore and WH Smith’s shares were firm in early morning trading on Monday. That implies the market is at ease with the issue and believes the risks to earnings can be contained,” said Mould.
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