WH Smith PLC (LSE:SMWH) shares fell 6.5% to 640p after it posted results that cover a period that encompassed its transition to a pure-play travel retailer following the sale of its High Street business and funkypigeon.com, but also followed a profit warning after North American income was found to have been over-inflated.
The FTSE 250 group, which is being investigated by the Financial Conduct Authority over the issue that led to CEO Carl Cowling stepping down, said a remediation plan launched after receiving findings of a review by Deloitte last month is "progressing at pace".
Management plan to close some Las Vegas stores and elsewhere in the US under the In Motion banner, while taking a more measured approach to new store openings.
For the year to 31 August 2025, it reported a 5% rise in group revenue to £1.55 billion, with revenue growing 5% in the UK, North America up 7%, and the Rest of the World rising 12% on a constant currency basis.
Headline profit before tax and non-underlying items fell to £108 million from £114 million a year earlier. Headline trading profit declined to £159 million from £170 million. Following the profit warning, the group said headline trading profit was expected to be between £100 million and £110 million.
The company has proposed a final dividend of 6p, bringing the full-year payout to 17.3p per share. The dividend policy has been reset in line with earnings from its continuing operations.
The group expects full-year headline profit before tax for the 2026 financial year to be between £100 million and £115 million, with a margin outlook of 7-8%.
“It has been a difficult end to the year for the Group,” said interim group chief executive Andrew Harrison. “The board and I are acutely aware that we have much to do to rebuild confidence in WHSmith and deliver stronger returns as we move forward.
He said with the group now a pure-play global travel retailer (selling items like bottles of Coke and packets of crisps for around double what they cost the public in a supermarket), "travel retail is a high growth market, and we have attractive market positions in the UK, North America and our international markets from which we are well-positioned to grow".
Analysts at Peel Hunt said the PBT outcome of £108 million was at the top of the guided range, "which is a good start".
The margin outlook of 7-8% for this year "is satisfactory enough in our view" and guidance for 2026 PBT in the range of £100-115 million "would imply 10% downgrades but our view is that the market was already expecting that and the clarity given today is a plus".
** UPDATE: Adds share price and broker comment **