WH Smith boss Leo Quinn has failed to convince shareholders that a turnaround is on the horizon, as the retailer’s shares slumped for the second day running.

The retailer revealed a sharp dip in profit on Thursday, as Quinn – who has previously led comebacks at Balfour Beatty and Qinetiq – blamed its woes on “forced growth” under previous management.

The retailer lost more than eight per cent in early trading, to 364p, after initial losses on Thursday. The stock has lost about 14 per cent since the group revealed its profit drop, extending its year-to-date losses to 41 per cent.

WH Smith returned a £76m pre-tax profit in the year to the end of August, more than a quarter lower than the year before and significantly behind the £115m it had initially targeted. 

On a statutory basis, the group slumped to a £107m loss from a £2m profit last year, hit by £164m in impairments, write-downs and restructuring costs. 

In his update to shareholders on Thursday, Quinn conceded that “there is a cost to the transformation programme” he has set out since arriving in April. “But it is necessary to strengthen the foundations of the business to improve profitability.”

Quinn said his “detailed analysis” of WH Smith in recent months has revealed that “forced growth delivered a complex and siloed Group structure without scalable benefits. This resulted in increased costs, too many loss-making stores, acquisitions not integrated effectively and high organisational complexity.”

His turnaround of WH Smith, which is partially funded by £106m it raised from investors in June, will see the firm scale back its underperforming operations in Europe in the US and withhold all bonuses to staff and senior leadership. 

The group expects its revenues in its rest of the world division to decline by between 10 and 20 per cent owing to store closures. Its takings in North America are set to slow, as this division continues to battle with lower footfall at its airport stores due to travel disruption caused by the Iran war.

WH Smith is still recovering from the major accounting blunder which emerged last year, revealing that it had been overstating the profit of its North American division for years.

The scandal tanked its share price, caused an investigation from the Financial Conduct Authority (FCA) and led to the eventual departure of Carl Cowling, who had been the group’s chief executive since November 2019.

Conroy Gaynor, a senior consumer analyst at Bloomberg Intelligence, said WH Smith is “in the midst of a difficult turnaround, with likely headwinds to earnings at least in the near term”. 

Wayne Brown, an analyst at stock broker Panmure Liberum, blamed the share price slip on WH Smith’s decision to cut its earnings per share guidance by 18 per cent. He said: “We think even though it was a chunky cut, its for good reasons that bod well for the future.”

Brown praised the retailer’s leadership for its “upbeat and refreshingly honest” approach. “Management were very honest about the issues of the past and remedies,” he said.