North America was meant to be WH Smith's golden opportunity - not a dent to its credibility

This is how, in retail-land, to shatter your credibility with investors in one short statement: confess to a significant overstatement of profits related to the recognition of payments from suppliers.

- Nils Pratley

This stuff is sensitive - witness the upheaval after an episode at Tesco a decade ago - and basic. While it is normal for retailers to receive payments from suppliers related to the volume of goods sold, or promotional activity, accounting rules are strict. The sums must be booked as they are earned. In a multi-year agreement, payments cannot all be taken upfront.

WH Smith's last annual report was also clear the principle should be straightforward to put into practice. "The level of complexity and judgment is low in relation to establishing the accounting entries and estimates, and the timing of recognition," it said.