WH Smith lost more than eight per cent of its market value on Friday morning, falling to 364p, as investors delivered a second day of punishment for a profit collapse and a turnaround plan they do not yet believe.

The stock has now shed about 14 per cent since the retailer reported its annual results on Thursday, extending year-to-date losses to 41 per cent. Chief executive Leo Quinn, who arrived in April after engineering recoveries at Balfour Beatty and Qinetiq, blamed the group's problems on "forced growth" under previous management.

What did the numbers show?

WH Smith returned a £76m pre-tax profit in the year to the end of August — more than a quarter below the prior year and far short of the £115m it had originally targeted. On a statutory basis, the picture was worse: a £107m loss, against a £2m profit last year.

The swing was driven by £164m in impairments, write-downs and restructuring costs. Quinn conceded in his update to shareholders that "there is a cost to the transformation programme" he has set out since taking charge. "But it is necessary to strengthen the foundations of the business to improve profitability," he said.

Why does Quinn blame 'forced growth'?

Quinn said months of "detailed analysis" had revealed the root of the group's troubles. "Forced growth delivered a complex and siloed Group structure without scalable benefits," he told shareholders.

The consequences, in his words:

• Increased costs
• Too many loss-making stores
• Acquisitions not integrated effectively
• High organisational complexity

His diagnosis carries weight in the City: Quinn has previously led successful comebacks at construction group Balfour Beatty and defence technology firm Qinetiq.

How will the turnaround be paid for?

The restructuring is partially funded by £106m raised from investors in June. It will see WH Smith scale back underperforming operations in Europe and North America, and withhold all bonuses for staff and senior leadership — a measure the company has already implemented.

The group expects revenues in its rest of the world division to fall by between 10 and 20 per cent as stores close. North American takings are set to slow too, with the division battling lower footfall at its airport stores because of travel disruption caused by the Iran war.

What is the legacy of the accounting scandal?

The retailer is still recovering from a major accounting blunder that emerged last year, when it revealed it had overstated the profit of its North American division for years.

The scandal tanked the share price, triggered an investigation by the Financial Conduct Authority, and led to the departure of Carl Cowling, who had served as chief executive since November 2019.

Can analysts see a recovery?

The analyst community is split on how quickly Quinn can deliver.

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."

Panmure Liberum's analysts were more constructive, saying Quinn's "plan is coming together" — though he faces "another year of heavy lifting" ahead.

"We remain positive behind the execution of the recovery plan but would like to see more cash drop through," they said.

For now, shareholders want the same thing: proof that the foundations Quinn says he is strengthening can carry a return to profit.