Value of WH Smith takes £600m hit after US accounting blunder

Almost £600m was wiped off the market value of WH Smith yesterday after the retailer cut financial forecasts and launched an independent review after discovering an accounting blunder at its North American arm.

- Kalyeena Makortoff Sarah Butler

Shares plunged 42% following the news that profits at the division had been overstated by £30m.

The group said it discovered the mistake while preparing its year-end results. The newsagent and travel retailer said it was "largely" because it had logged some income too early.

The mistake relates to arrangements it has with suppliers, which offer rebates if the retailer hits sales targets on certain items and payments for marketing and promotions. It is understood, however, that income should have been logged in accounts for the next financial year rather than for the 12 months to 31 August.

WH Smith said headline profits from its North American division - which serves the US and Canada - were now expected to come in at £25m, down from previous market expectations of £55m.