WH Smith, a well-known UK retailer, has announced a significant drop in its profits for the year ending August 31. The company now expects annual underlying pre-tax profits to be around £75 million, down from £108 million the previous year. This decline comes after several profit forecasts were lowered and follows a recent fundraising effort, where the company raised £103 million through an equity offering. Earlier, WH Smith had predicted profits would fall between £75 million and £90 million, but the latest update shows a sharper decline than anticipated. The drop in profits is largely due to lower trading profit margins, which have been affected by increased promotional activity, reduced brand marketing, and ongoing inflation pressures. WH Smith has shifted its focus in recent years, selling its UK high street stores to private equity firm Modella Capital. Now, the company mainly operates in travel locations such as airports and train stations, as well as in hospital sites. The company has faced several challenges in recent years. It admitted to overstating profits for its North American business by up to £50 million due to audit issues. This led to an investigation by the UK’s accountancy watchdog into PwC, the firm that audited WH Smith. Additionally, the Financial Conduct Authority (FCA) is looking into the company over the accounting issue. Former CEO Carl Cowling stepped down in November 2022 after an independent report by Deloitte confirmed issues with the audit process in the US. Despite the profit decline, WH Smith reported positive sales growth. For the full year, like-for-like sales increased by 2%, and UK revenue growth rose to 4% in the final three months of the year. This growth was driven by a recovery in airport sales, which rose 2% after a previous decline linked to travel disruptions caused by the Iran war. Sales at hospital sites increased by 8%, and revenue from rail station shops rose 4% in the final quarter. The company stated it is making "good progress on the group’s transformation agenda," focusing on cost control and targeted investments in its travel essentials business.