Dan Coatsworth, head of markets at AJ Bell, said: “Last year’s exit from its declining high street operations was supposed to be the moment WH Smith spread its wings as a majestic butterfly – sustained by its much more profitable travel operations.
“However, the company has been caught cold by major accounting failures and a geopolitical situation which could undermine foot traffic through its stores.
“The pivot to travel made sense – WH Smith benefits from a captive audience in hospitals, airports and rail stations which enables it to charge premium prices and generate healthy margins.
“However, investors might now miss the high street operations because those assets generated healthy cash flow and that money helped support the dividend.
“Now, it has suspended the dividend to reduce debt and strengthen the group’s financial position.
“While the decision to preserve cash is likely a prudent one, it’s gone down like a lead balloon with the market.
“It doesn’t help that WH Smith has not purely been a victim of external factors.
“The decision to sanction a major redevelopment of its UK travel stores – while it may pay off in the longer term – has put a dent in profit at a time of considerable uncertainty.
“The accounting issues hang like a particularly ugly looking cloud over the business given the ongoing FCA probe.
“Recently appointed executive chair Leo Quinn has a reputation as a corporate ‘Mr Fixit’ but even he may be blowing out his cheeks and giving a whistle at the scale of the rebuild now required at WH Smith.”
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