WH Smith has lost 63 per cent of its market value since selling its high street business, and on Thursday new chief executive Leo Quinn must persuade shareholders — and a wall of shortsellers — that the travel-only strategy still works.

The numbers explain why the pressure is intense. The retailer is currently London's 10th most-shorted listed company, as traders bet its troubles continue. Its shares are down 35 per cent year to date. It has cut its profit outlook twice in recent months, and now guides to a pre-tax profit of about £75m — a 40 per cent year-on-year decline.

What went wrong with the 'pivotal moment'?

When WH Smith announced the sale of its 480 high street stores to private equity firm Modella Capital in March last year, then-CEO Carl Cowling hailed a "pivotal moment" and promised "substantial growth and value for all stakeholders". The logic was simple: strip out the struggling high street, keep the travel arm, and cash in on fast-growing demand for quick food and convenient accessories at airports and train stations.

More than 18 months on, that verdict looks premature. Even the exit deal itself underdelivered. WH Smith slashed its initial £76m asking price to about £40m, citing "a more cautious outlook" and "softer trading", and eventually made just £10m from the sale. The high street decline it hoped to escape ended up marring its departure — and the renamed TG Jones chain has struggled under its new ownership too.

Why is travel hurting a travel retailer?

The core problem sits in the very business WH Smith bet on. The company has repeatedly blamed a dip in airline passengers caused by the Iran war, which disrupted key travel routes at the start of this year.

Passengers who do pass through its shops are spending less. The retailer has told shareholders that airlines have passed rising jet fuel costs into higher ticket prices, leaving travellers more parsimonious. That hurts doubly. WH Smith typically makes tidy margins on items like headphones and pillows, but lower store footfall plus softer spend per passenger hits takings hard.

Relief isn't coming soon. Energy costs are staying high despite renewed shipping levels and oil prices dipping as President Trump signals he wants to end the Iran war. Michael O'Leary, chief executive of Ryanair, has warned that air fares could rise by as much as a fifth next year. British Airways owner IAG said last week that its protection against higher fuel prices — its fuel hedging (contracts locking in future prices) — will lessen significantly next year. All of that squeezes the holiday budgets of the very customers WH Smith depends on.

What about the accounting scandal?

Alongside the Middle East fallout, WH Smith carries an entirely self-inflicted wound. An accounting error flattered the profit figures of its North American division for years.

The consequences were brutal. The scandal wiped £600m off WH Smith's valuation in its biggest ever single-day stock decline and forced Cowling's exit. It has also attracted an ongoing probe by the Financial Conduct Authority (the UK's financial markets regulator).

Can Leo Quinn fix it?

Quinn, who took over as chief executive, arrives with turnaround credentials. He has led successful revivals at construction firm Balfour Beatty and defence group Qinetiq, so he knows how to steady a damaged listed company.

Thursday's full-year results are his first big audition. He needs to show that the travel-only model — the entire strategic rationale for the high street sale — can deliver the growth Cowling promised, and that the accounting mess is contained while the FCA investigation runs its course.

The market isn't waiting hopefully. With a 63 per cent value decline since the Modella deal completed, two profit warnings, and hedge funds parked firmly among the top ten short positions in London, Quinn has to give investors a reason to believe. The shortsellers think he can't. Thursday is his chance to prove otherwise.